According to recent sanctions by securities industry watchdog, FINRA (Financial Industry Regulatory Authority), Citigroup Global Markets has been displaying inaccurate research ratings to customers for numerous equities over a five-year period. FINRA has fined Citigroup $11.5 Million for these faulty ratings and for related supervisory failures.
Citigroup Equity Research Ratings Were Inaccurate on 1,800+ Securities
Retail investors rely on equity research ratings to make assessments of the performance and future performance of public securities. Inaccurate research ratings mislead customers into making bad investments. Citigroup’s brokers and supervisors also relied on inaccurate research ratings to manage customer accounts.
From February 2011 to December 2015, Citigroup displayed to investors, brokers, and supervisors inaccurate ratings related to more than 1,800 equities, or more than 38% covered by the firm. These mistakes included the wrong execution recommendations (“buy” instead of “sell”); ratings which were mixed up between securities; or non-ratings for securities which were actually rated.
The inaccuracies in the ratings had huge impact across Citigroup’s securities customer base. Because of its errors, Citigroup brokers solicited thousands of trades which were misaligned with the correct ratings and recommendations. To top it all off, Citigroup failed to rectify the inaccuracies in a timely manner.
While Citigroup did not confirm or deny FINRA’s findings, the $11 Million fine stands…
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