Citigroup Global Markets, Inc has been fined $500,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise and detect securities fraud committed by former Smith Barney sales assistant Tamara Moon who worked in the firm’s Palo Alto, California, branch office. (Smith Barney is a division of Citigroup Global Markets, Inc. and is now doing business as part of Morgan Stanley Smith Barney, LLC.) As reported in a previous blog posting, Tamara Moon was barred from the industry back in 2009 for bilking as much as $750,000 from elderly and vulnerable customers, including her own father, by taking advantage of Smith Barney’s lax supervision. According to FINRA, the firm failed to detect or investigate numerous “red flags” that should have alerted them to Moon’s fraud. Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement noted that “Citigroup had reason to know what she was doing and could have stopped her.”
Although the firm agreed to reimburse customers and pay a $500,000 fine, the firm consented to the entry of FINRA’s findings without having to admit or deny the charges. The practice of paying a substantial fine without having to admit any findings of wrongdoing is a standard procedure in FINRA settlements.