Citigroup Inc. has agreed with the Security and Exchange Commission’s (SEC) allegation of non-compliance with record-keeping regulations and consented to pay $2.9m as a civil penalty fine on the bank.
The SEC accused Citigroup bank’s broker-dealer unit of breaking record-keeping measures to disguise certain expenses they experienced in the supporting businesses. The broker-dealer department has to store and maintain the records of all the company’s debts and properties. To comply with business regulations, companies must detailed records of everything and should disclose companies’ asset and liability position.
According to the SEC’s investigation, Citigroup did not implement a proper system to maintain record-keeping, and they implemented an uncertified method from 2009 to 2019 to calculate the expenses in their supervision businesses. SEC also stated that Citigroup fixed the percentage of all indirect expenditures. At the end of the year, they divided the permanent “allocation grids” to divide the indirect amount of the expense into a certain price according to the specific categories. After calculating the indirect costs by unethical assessment were then added to a company’s official records.
Sanjay Wadhwa, the director of the SEC’s Division of Enforcement, “Recordkeeping failures such as these, perpetuated over at least a decade, can undermine the viability of those functions. The SEC will continue to vigorously enforce the books and records provisions of the federal securities laws, which are crucial to well-functioning markets.” An investigation like this on companies enhances their operational system and leads to bolstered monitoring by compliance with regulatory authorities.