NASD Fines Citigroup $1.1 Million For Mutual Fund Waiver Violations

NASD fined Citigroup's Global Markets unit $400,000 Thursday after determining that more than 100 of its brokers falsely claimed their customers were disabled in order to obtain waivers of mutual fund sales charges. Citigroup will also have to pay $715,000

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NASD fined Citigroup’s Global Markets unit $400,000 Thursday after determining that more than 100 of its brokers falsely claimed their customers were disabled in order to obtain waivers of mutual-fund sales charges.

Citigroup will also have to pay $715,000 in restitution to the affected mutual funds.

NASD said Citigroup failed to address a known supervisory and recordkeeping problem, allowing representatives “were able to improperly exploit the mutual funds’ fee-waiver provisions that were specifically reserved for disabled individuals.”

NASD officials say Citigroup processed more than 2,400 waivers that were based on false claims. NASD has since pursued disciplinary actions against five Citigroup registered representatives and has further investigations underway into other brokers.

NASD said the scheme was carried out between June 2001 and June 2002. NASD also ordered Citigroup to review its policies, systems, procedures and training related to waivers in mutual-fund transactions.

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