Citigroup Global Markets Inc. agreed to pay $18.3 million to settle charges that it billed investment advisory clients unauthorized fees and misplaced client contracts.
The Securities and Exchange Commission said Citigroup failed to confirm the accuracy of billing rates, which resulted in the overcharging of at least 60,000 advisory clients over a 15-year period. The unauthorized fees, which Citigroup collected when the clients suspended their accounts, yielded about $18 million for the company.
In addition, Citigroup could not locate about 83,000 advisory contracts for accounts opened between 1990 and 2012, the SEC said. Without those contracts, Citigroup could not validate whether the fees clients negotiated when they opened their accounts were maintained over the years. The SEC said Citigroup received an estimated $3.2 million in excess fees from clients whose contracts were lost.
The SEC censured Citigroup and required it to pay $3.2 million in disgorgement of the excess fees, plus $800,000 in interest and a $14.3 million penalty.
The settlement came days after Citigroup Global Markets agreed to pay $5.9 million to settle SEC claims that it made false and misleading statements about a foreign exchange trading program sold to investors.
Citigroup Global Markets is a subsidiary of Citigroup Inc.