New York, NY: (Jun-06-07) The National Association of Securities Dealers filed a class action lawsuit against Citigroup Global Markets Inc., alleging that a team of financial advisers in Charlotte misled more than 200 BellSouth employees. The NASD suit claimed that Citigroup failed to adequately supervise financial advisers who used misleading sales materials in dozens of seminars in which they promised 12% annual returns. Although the NASD alleged violations of its just and equitable trade principles rules, it did not file fraud charges.
Foregrounded against the landscape of layoffs, buyouts and early retirements for employees at big companies, regulators are growing increasingly concerned about the competition among financial advisors to gain those assets.
In a settlement reached, Citigroup Global Markets agreed to pay $15 million, which will include $3 million to settle the allegations by the National Association of Securities Dealers and $12.2 million in restitution to the former employees at BellSouth, now a unit of AT&T Inc. The NASD suspended three brokers and two branch managers, fining them a total of $295,000. Neither the firm nor the employees admitted or denied the charges. [