Citibank Unit fined $1.25 Million Fine for Poor Background Check Procedures
According to FINRA, Citigroup’s brokerage unit, Citigroup Global Markets, Inc., failed in running background checks on at least 10,400 non-registered associated persons, which led to three individuals who’d been convicted of crimes working for the firm.
Federal securities laws require broker-dealers to fingerprint associated persons working in a non-registered capacity before or upon association with the firm. The fingerprint results provide information about a prospective associated person’s criminal background, and firms use the results as part of their background check to determine, among other things, whether a prospective associated person has previously engaged in misconduct that subjects the individual to a statutory disqualification. Federal banking laws require banks to conduct similar checks on banking employees using a more limited list of disqualifying events.
Citigroup Global Markets didn’t admit or deny the allegations, and the firm self-reported the alleged infractions to FINRA.
FINRA’s action is a reminder that broker-dealers need strong policies and procedures, and those policies and procedures must be followed.
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