Citibank Global Aiding & Abetting Shorts, While Exposing Clients to Tax Losses

[Guest ValueCarl]

Crime does seem to pay whilst measuring fines versus BILKING by BANKS! imo

 

http://www.reuters.com/article/idCNN0624048220100406?rpc=44

 

NEW YORK, April 6 (Reuters) - Citigroup Inc (C.N) has been fined $650,000 by an independent U.S. brokerage regulator for disclosure and supervisory failures relating to a "stock borrow" program intended to help clients sell shares short.

 

In its first such enforcement action, the Financial Industry Regulatory Authority said on Tuesday the bank's Citigroup Global Markets Inc unit failed to properly disclose risks to retail and other customers in its direct borrow program, which extended more than 4,000 loans averaging $301 million a year.

 

FINRA said that from Jan. 1, 2005 to Nov. 30, 2008, more than 2,300 customers lent the program more than 770 securities that were hard to borrow, mainly because a large number of short-sellers had already borrowed them to use as collateral.

 

Citigroup's brokers did not make clear to customers that most of the loaned securities were used in short-selling, which can cause them to lose value, and that customers could sell them at any time even while they were on loan, FINRA said.

 

"The program created an artificial impediment to liquidity," FINRA enforcement chief James Shorris said in an interview. "Disclosures related to short-selling are material to customers insofar as they have a potential impact on the price of securities they are holding. Customers may not realize they can reduce the potential loss by selling the securities."

[Guest ValueCarl]

It's interesting because, a good friend of mine notated this nebulous language for creating clouds in the MINDS of those reading it, this way. It's a fine take on the movie, "Chicago," and the "Razzle, Dazzle Them" song and dance by actor, Richard Gere. imo 

 

<Citigroup's brokers did not make clear to customers that most of the loaned securities were used in short-selling, which can cause them to lose value, and that customers could sell them at any time even while they were on loan, FINRA said.

 

"The program created an artificial impediment to liquidity," FINRA enforcement chief James Shorris said in an interview. "Disclosures related to short-selling are material to customers insofar as they have a potential impact on the price of securities they are holding. Customers may not realize they can reduce the potential loss by selling the securities.">

 

 

What does that gobbledygook mean?  Sell them even if on loan?  That needs to be explained!!  To all of us!! (I.E., to the investing public.) We are getting closer to exposing what the brokerages have been trying to keep secret for years!!

 

FINRA should not be allowed to get away with a perfunctory statement like that.