Citigroup Global Markets Inc is being charged $3 million by NASD to settle charges connected to misleading materials it allegedly gave Bellsouth employees during retirement meetings and seminars held in North Carolina and South Carolina. NASD also says that Citigroup has to pay over 200 ex-Bellsouth employees $12.2 million in restitution. The latter comes came from a civil class action involving Smith Barney, which had tried to get the case dismissed under SLUSA.
NASD says that Citigroup neglected to properly supervise certain brokers located in Charlotte, North Carolina that used the misleading sales materials during numerous meetings with BellSouth Corp. employees. The materials made “exaggerated and unwarranted projections of future earnings” and did not elaborate on the related risks of making certain investments.
Following these presentations, over 400 BellSouth employees opened more than 1100 accounts via these brokers. Many of their investors had retired early from BellSouth and had less than $350,000 in savings. Many of them cashed out their 401(k) accounts and pensions and invested these funds with the Citigroup brokers.
Also disciplined by the NASD:
*Jeffrey Sweitzer, who developed the sales campaigns, directed many of these seminars, drafted the misleading materials, and managed the brokers. He suspended for 18-months and ordered to pay a $125,000 fine.
*Matthew Muller was suspended for $9 months and ordered to pay $50,000 for his participation in numerous seminars and in-person meetings.
*Joseph Zentner received a 30-day suspension and was fined $30,000 for helping Sweitzer prepare some of the misleading materials.
All three men are being ordered to complete 40 hours of training on complying with federal securities laws and NASD rules.
*Randall Matz, a branch office manager, was suspended from his supervisory role for 90 days and fined $60,000.
*Elizabeth Harris, a branch operations manager, was also suspended from acting as a supervisor for 45 days. She is being ordered by NASD pay a $30,000 fine. Both must pass an NASD Qualification Exam before they can return to these roles.
All parties, including Citigroup, agreed to the suspensions and fines without admitting to or denying the charges.
Shepherd Smith and Edwards has represented many former employees of telephone companies with similar complaints against various brokerage firms. We have an excellent track record for helping these investors recover their losses. If you are an investor who has lost money because of the misconduct of broker-dealers or anyone else in the securities industry, contact Shepherd Smith and Edwards to schedule your free consultation.
Related Web Resources:
Citigroup to pay $15.2 million for misleading retirees, Reuters, June 6, 2007