Citigroup Censured, Fined Over Hedge Funds
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Citigroup Inc., the world’s biggest bank, was censured and fined $250,000 by the NASD for failing to explain how its hedge funds would produce 15% annual returns and for inadequately listing potential risks.
The regulator formerly known as the National Assn. of Securities Dealers described the settlement as its largest enforcement action involving hedge fund sales by a broker-dealer. Some of Citigroup’s materials also included misleading charts on past performance, according to the NASD.
The censure is the latest regulatory and legal setback for Citigroup Chief Executive Charles Prince, who pledged this month to take “strong action” to improve the bank’s standing. In Tokyo this week, Prince bowed in remorse and apologized to Japanese regulators who forced Citigroup to shutter its private bank in the nation.
Citigroup neither admitted nor denied the NASD allegations, the NASD said. “We took immediate action and cooperated fully with the NASD to ensure that all materials comply with current NASD guidance,” said Susan Thomson, a Citigroup spokeswoman.
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