Citigroup is set to pay a $30 mn fine after one of its Taiwan unit analysts improperly shared non-public information with major clients.
Confidential information released by analyst Kevin Chang in December 2012 included lower order forecasts for Apple iPhones for the first quarter of 2013, which would have had a detrimental effect on Apple, according to William Galvin, Massachusetts’ Secretary of the Commonwealth.
Detailing a number of email requests sent to Chang, the regulator says Chang emailed non-public information to major clients including SAC, T Rowe Price, Citadel and GLG Partner. After receiving the information on Hon Hai Precision Industry – a major supplier of Apple iPhones – SAC, Citadel and T Rowe Price each sold Apple stock, according to Galvin’s complaint.
‘The Citi analyst should not have been that accessible to the clients. He should have been better protected by the compliance team,’ Galvin says.
While no criminal charges were filed, Galvin’s office filed civil charges against Citi for ‘failing to supervise’. The $30 mn fine is the result of a settlement, which comes only a year after Citi was fined $2 mn for improperly disclosing research on Facebook’s IPO. The second fine comes at a much higher price following Citi’s breach of its agreement to ‘cease and desist from further violations’ after its Facebook IPO fine.
The bank takes ‘regulatory compliance requirements very seriously and train(s) all of our employees about these obligations,’ a spokesperson for Citi told Reuters.
According to the complaint, Chang’s employment at Citi was terminated last month.
