New York Securities Fraud Lawyers Blog
Investors rely upon their brokers for accurate statements on the market: without knowledge and researched facts, there is no trust that our investments have been wisely managed. In understanding this need, regulatory bodies intervene in situations when brokerage firms have failed to live up to their end of the informational bargain struck with their customers. To learn more about failure to disclose, misrepresentation, and omission within the securities game – as well as Malecki Law’s extensive experience in aiding investors harmed by misinformation – visit the Investors page of our firm’s site.
A new instance of high-profile misinformation is alleged in a May 22nd press release which confirms that the Financial Industry Regulatory Authority (FINRA) has fined Citigroup Global Markets, Inc. the sum of $3.5 million. The release cites numerous causes for the admonishment, including several alleged violations pertaining to subprime residential mortgage-backed securitizations (RMBS), including the supplying of erroneous information on mortgage performance and failure to supervise. An RMBS can be defined as a type of security in which investor profit stems from home-equity loans and mortgages (subprime and otherwise).
FINRA cites inaccurate RMBS information on Citigroup’s website as the fine’s direct cause. Citigroup and other RMBS distributors are required to disclose accurate and up-to-date historical data on mortgage performances, so as to grant investors a fair assessment of the RMBS value, as well as the true likelihood of a mortgage-owner’s failure to make payments. According to FINRA Executive Vice President and Chief of Enforcement Brad Bennett, “Citigroup posted data for its RMBS deals that it should have known was inaccurate; for over six years, investors potentially used faulty data to assess the value of the RMBS.”
In the case of three specified securitizations, the inaccurate data may have directly affected investors assessment of subsequent RMBS. The data apparently first appeared on Citigroup’s site in January 2006, where it was purported to have remained online until May 2012, despite the company being informed by unnamed parties that the data was false.
The fine also accounts for alleged failures to supervise mortgage-backed securities pricing. Citigroup is said to have lacked procedures and necessary record keeping needed to verify prices, and to have not taken proper steps to assess the validity of traders’ set prices. The release adds that Citigroup failed to maintain the original copies of their margin calls after re-pricing certain mortgage backed securities. A lack of documented supervisory approval and failure to demonstrate application of revised prices only furthered FINRA’s incentive to penalize. As is often the case for companies dealt fines such as these, Citigroup neither admitted nor denied the charges, but nevertheless consented to FINRA’s decision.
For new and experienced investors alike, having the best possible intelligence and data motivating one’s investments is the difference between either making smart investments, or being led astray by those brokers who aim to deceive. For a free consultation on this matter and an array of others, contact the team of esteemed securities attorneys at Malecki Law. It is both your benefit and your legal right to have the accuracy of your securities data reviewed by legal professionals. We believe that our financial markets are only as strong as the consumers who make solid, informed investments that allow securities industry to flourish.