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SEC Charges Citigroup and Morgan Stanley Nearly $6 Million for Misleading Investors

Citigroup Global Markets and Morgan Stanley Smith Barney agreed to pay over $2.96 million each in order to settle charges filed against them by the United States Securities and Exchange Commission (SEC). According to the federal agency, the firms made misleading and false statements to investors during sales pitches about a foreign exchange trading program.

The SEC stated that registered representatives from both firms pitched CitiFX Alpha, a foreign exchange trading program, to customers between August of 2010 and July of 2011. Following the SEC’s investigation, they found that verbal and written presentations were based on past risk and performance metrics that failed to inform investors that every trade would be charged markups and that they could enter the program with far more leverage than they were otherwise told. This failure to disclose allegedly cost investors a significant amount of money.

"Citigroup and Morgan Stanley sold securities in a complex trading program without giving certain investors important information about the risks and costs of the program,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “Investors simply cannot be sold investments based on disclosures that are inaccurate or incomplete."

The SEC found that Citigroup and Morgan Stanley Section 17(a)(2) of the Securities Act of 1933. Without admitting or denying the SEC’s findings, both firms agreed to pay more than $5.9 million combined in penalties, disgorgement and interest.

If you lost money after investing in the foreign exchange trading program CitiFX Alpha, contact our securities fraud attorneys at Meyer Wilson today. We have recovered more than $350 million in verdicts and settlements for our clients since first opening our doors, and are committed to providing each new client we accept with the passionate and knowledgeable legal representation they require in their time of need. Give us a call at one of our four office locations, or fill out our online form to request a free case consultation today.

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The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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