At a July 2011 dinner for Citigroup clients, a research analyst identified a stock to bet against. In his last research notes before that gathering, he upgraded the shares, advising investors to stick with them.
Bloomberg News reports that the analyst was among several cited yesterday in an action by the Financial Industry Regulatory Authority, which fined Citigroup $15m. The employee offered similar tips at six subsequent “idea dinners” on stocks that he had rated as hold or neutral, Finra said.
The incident is among several examples Finra cited, alleging Citigroup failed to supervise research analysts and prevent them from sharing material, non-public information. It’s reminiscent of industry-leading fines the bank paid in 2003 to settle claims analysts published misleading stock research to win investment-banking business. The firm has paid at least $33m over relevant violations since, Finra said.
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