Citigroup Inc. on Thursday was fined $30 million by Massachusetts after one of its analysts gave clients research on a major Apple Inc. supplier a day before the report was released publicly.
The fine is among the largest in recent years levied by regulators against a firm for oversight of analysts. The fine was levied by the office of the Secretary of the Commonwealth of Massachusetts.
The Massachusetts secretary's office alleged that Kevin Chang—a research analyst employed by a Taiwanese affiliate of Citigroup—released unpublished research information about Apple supplier Hon Hai Precision Industry Co. to a hedge fund and institutional clients one day before publishing virtually identical information to the public.
Citigroup admitted to the Massachusetts authorities' statement of acts but neither admitted nor denied any violations of law.
"We are pleased to have this matter resolved. We take our regulatory compliance requirements very seriously and train all of our employees about these obligations. We are also constantly working to improve, manage and monitor the compliance and controls process," said Citi in a statement.
Mr. Chang was terminated by Citigroup on Sept. 4, the Massachusetts secretary's office said. He couldn't immediately be reached for comment.
Recipients of the nonpublic information about the supplier included SAC Capital, T. Rowe Price, Citadel and GLG Partners, according to the secretary's office. Representatives of the four firms didn't immediately respond to requests for comment.
Citigroup Global Markets Inc., the bank's investment-banking arm, is also required to perform a three-year review of its policies regarding the disclosure of confidential information.
"It seems that the concept that investors are to be presented with a level playing field when it comes to the product of research analysts is a lesson that must be learned over and over again," said Secretary of the Commonwealth of Massachusetts William F. Galvin in a statement.
Mr. Galvin's office alleged that Mr. Chang was pressured by large clients for his research on Hon Hai on Dec. 13, after Citigroup rival Macquarie Group published a report cutting its estimate of Hon Hai's production numbers.
Mr. Chang released the information to several units of SAC as well as to other hedge-fund and institutional clients, Mr. Galvin's office alleged. Mr. Chang on Dec. 14 then published his Hon Hai research, which included virtually identical information to what he had given SAC and the others the previous day, Mr. Galvin's office alleged.
Massachusetts authorities noted that the report contained significant cuts in forecasts for Apple iPhone production and said it "would have a detrimental impact on Apple." Authorities also alleged that three Citigroup clients executed sales of Apple stock between receiving the information and the publication of Mr. Chang's Hon Hai report.
In a similar case, Citigroup last year was fined $2 million for failing to supervise Internet analyst Mark Mahaney and a junior analyst he oversaw after the pair allegedly ran afoul of rules covering disclosures to the media about Facebook Inc. and Google Inc.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
via apple - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFt_YX8_qokIatEY1P8JIg2JuVilw&url=http://online.wsj.com/article/SB10001424052702303722604579113141606170608.html
Posts
0 comments:
Post a Comment