On December 28 The Financial Industry Regulatory Authority (FINRA) announced a $5.5 million fine against Citigroup and “required the firm to pay at least $6 million in compensation to retail customers for displaying inaccurate research ratings for numerous equity securities during a nearly five-year period, and for related supervisory violations”.
“Because of errors in the electronic feed of ratings data that the firm provided to its clearing firm, the firm either displayed the wrong rating for some covered securities (e.g., “buy” instead of “sell”)”, continues the report.
The error affected more than 1,800 securities, about 38 percent of those covered by the firm, from February 2011 through December 2015, but the FINRA’s report don’t say how much Citigroup’s customers have lost due to bad rating.
This electronic error is just the last of a series of scandals that hit the bank sector and Citigroup. In the early 2000s, Jack Grubman, a Salomon Smith Barney’s analyst, was at the center of a conflict of interest controversy. In 2002 Citi was accused of helping Enron conceal its financial condition by disguising debt as trading transactions, and in 2004 was also implicated in WorldCom scandal. These are just few of scandal cases involving the credit institute (here a full list).