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Securities and Exchange Commission v. Administrative and Cease-and-Desist Proceedings With Sec, et al.

raw: In the Matter of : ORDER UNDER RULE 602(e) OF THE

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Securities and Exchange Commission v. Administrative and Cease-and-Desist Proceedings With Sec, et al.
Exhibit of Citigroup Pays $20 Million to Settle SEC Action Relating to Mutual Fund Sales Practices
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summary

Citigroup Global Markets, Inc. settled SEC charges for violating Section 17(a) of the Securities Act and Rule 10b-10 by failing to provide adequate disclosures in customer confirmations, paying a $20 million penalty and receiving a censure and cease-and-desist order, but was granted a waiver to retain access to Regulation E exemptions due to remedial actions and cooperation.

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Citigroup Global Markets, Inc. (CGMI) agreed to settle SEC charges for violating Section 17(a) of the Securities Act of 1933 and Rule 10b-10 under the Exchange Act, related to insufficient disclosures in customer transaction confirmations. As part of the settlement, CGMI paid a $20 million civil penalty, accepted a censure, and agreed to a cease-and-desist order without admitting or denying guilt. The violations triggered a regulatory disqualification under Rule 602(c)(3), but the SEC granted a waiver under Rule 602(e), finding good cause based on CGMI’s remedial measures and cooperation.

narrative

Citigroup Global Markets, Inc. (CGMI) settled SEC enforcement actions for violations of Section 17(a) of the Securities Act of 1933 and Rule 10b-10 under the Exchange Act, stemming from inadequate disclosures in customer confirmations for securities transactions. The SEC’s March 23, 2005 Order imposed a $20 million civil penalty, a formal censure, and a cease-and-desist order requiring CGMI to halt future violations, though CGMI neither admitted nor denied the allegations. These violations triggered an automatic disqualification under Rule 602(c)(3), which would have barred CGMI from using the Regulation E exemption for future securities offerings. CGMI requested a waiver under Rule 602(e), asserting that its remedial actions, internal reforms, and full cooperation with the SEC demonstrated good cause. The SEC granted the waiver on March 23, 2005, concluding that CGMI’s conduct and corrective measures warranted an exception to the disqualification rule. This decision allowed CGMI to continue accessing Regulation E exemptions, preserving its ability to conduct certain securities offerings without full registration. The case underscored the SEC’s willingness to grant waivers when firms demonstrate meaningful compliance improvements following enforcement actions.

Enriched metadata

Scheme
non-corporate (95%)
Classified non-corporate(confidence 95%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →
Statutes
Section 17(a) of the Securities ActRule 10b-10
Parties
administrative and cease-and-desist proceedings with seccitigroup global markets, inc.jonathan g. katzsecretary of secSecurities and Exchange Commission
Keywords
securitiesordercgmiundercommissionunder securitiesmatter orderorder underwaiver disqualificationrequires cgmidisqualificationexchangemarchwaiverpursuant

Extracted insights

Entities 5
  • agency administrative and cease-and-desist proceedings with sec
  • company citigroup global markets, inc.
  • person jonathan g. katz
  • agency secretary of sec
  • agency Securities and Exchange Commission
Triples 8
  • Citigroup Global Markets, Inc. submitted letter requesting waiver of disqualification from securities registration exemption under Regulation E
  • Citigroup Global Markets, Inc. settled administrative and cease-and-desist proceedings with SEC
  • SEC issued Order Order Instituting Administrative and Cease-and-Desist Proceedings on March 23, 2005
  • SEC imposed censure against Citigroup Global Markets, Inc.
  • Citigroup Global Markets, Inc. required to pay civil monetary penalty $20 million to United States Treasury
  • Citigroup Global Markets, Inc. required to cease and desist from violations of Section 17(a) of Securities Act of 1933 and Rule 10b-10 under Securities Exchange Act of 1934
  • SEC granted waiver disqualification provision of Rule 602(c)(3) under Securities Act for Citigroup Global Markets, Inc.
  • Jonathan G. Katz signed as Secretary of SEC
PDF
In the Matter of : ORDER UNDER RULE 602(e) OF THE · Source
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Extracted body text (2,939c) 

 UNITED STATES OF AMERICA 
                                                                      Before                                                                      the                                                                      
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES ACT OF 1933 
Release No. 8559 / March 23, 2005 
 
ADMINISTRATIVE PROCEEDING  
File No. 3-11869 
 
 
      :         
In the Matter of :      ORDER UNDER RULE 602(e) OF THE  
    :      SECURITIES ACT OF 1933 GRANTING 
Citigroup Global Markets, Inc.,  : A WAIVER OF THE DISQUALIFICATION 
    :      PROVISION OF RULE 602(c)(3) 
       Respondent. : 
 
   :         
 
 
 Citigroup Global Markets, Inc. (“CGMI”) has submitted a letter, dated March 22, 2005, 
requesting a waiver of the disqualification from the securities registration exemption under 
Regulation E arising from CGMI’s settlement of administrative and cease-and-desist 
proceedings commenced by the Commission.  On March 23, 2005, pursuant to CGMI’s offer of 
settlement, the Commission issued an Order Instituting Administrative and Cease-and-Desist 
Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order 
(“Order”).  The Order: (i) imposes a censure against CGMI; (ii) requires CGMI to cease and 
desist from committing or causing any violations and any future violations of Section 17(a) of the 
Securities Act of 1933 (“Securities Act”) and Rule 10b-10 under the Securities Exchange Act of 
1934 (“Exchange Act”); (iii) requires CGMI to pay a civil monetary penalty in the amount of $20 
million to the United States Treasury; and (iv) requires CGMI to comply with certain 
undertakings.   
 
 Rule 602(c)(3) makes the Regulation E exemption unavailable for the securities of  
an issuer if a director, officer, principal security holder, investment adviser or underwriter of 
the securities to be offered, or any partner, director or officer of such investment adviser or 
underwriter, is subject to a Commission order pursuant to Section 15(b) of the Exchange 
Act.  Rule 602(e) provides that the Commission may waive this disqualification upon a 
showing of good cause.  
 
 Based on the representations set forth in CGMI’s request of March 17, 2005, the 
Commission has determined that a showing of good cause has been made pursuant to Rule 
602(e) and that the request for a waiver of the disqualification should be granted.  
 
 
 

 
 
 
                                                                            -2-
 
            Accordingly, IT IS ORDERED, pursuant to Rule 602(e) under the Securities Act, 
that a waiver from the application of the disqualification provision of Rule 602(c)(3) under 
the Securities Act resulting from the entry of the Order is hereby granted. 
 
            By the Commission. 
 
 
   
  Jonathan G. Katz 
                                                Secretary
OCR text (2,537c · tika · 95% conf) 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES ACT OF 1933 
Release No. 8559 / March 23, 2005 
 
ADMINISTRATIVE PROCEEDING  
File No. 3-11869 
  
  :  
In the Matter of :  ORDER UNDER RULE 602(e) OF THE  
  :  SECURITIES ACT OF 1933 GRANTING 
Citigroup Global Markets, Inc.,  : A WAIVER OF THE DISQUALIFICATION 
  :  PROVISION OF RULE 602(c)(3) 
     Respondent. : 
  :  
 
 
 Citigroup Global Markets, Inc. (“CGMI”) has submitted a letter, dated March 22, 2005, 
requesting a waiver of the disqualification from the securities registration exemption under 
Regulation E arising from CGMI’s settlement of administrative and cease-and-desist 
proceedings commenced by the Commission.  On March 23, 2005, pursuant to CGMI’s offer of 
settlement, the Commission issued an Order Instituting Administrative and Cease-and-Desist 
Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order 
(“Order”).  The Order: (i) imposes a censure against CGMI; (ii) requires CGMI to cease and 
desist from committing or causing any violations and any future violations of Section 17(a) of the 
Securities Act of 1933 (“Securities Act”) and Rule 10b-10 under the Securities Exchange Act of 
1934 (“Exchange Act”); (iii) requires CGMI to pay a civil monetary penalty in the amount of $20 
million to the United States Treasury; and (iv) requires CGMI to comply with certain 
undertakings.   
 
 Rule 602(c)(3) makes the Regulation E exemption unavailable for the securities of  
an issuer if a director, officer, principal security holder, investment adviser or underwriter of 
the securities to be offered, or any partner, director or officer of such investment adviser or 
underwriter, is subject to a Commission order pursuant to Section 15(b) of the Exchange 
Act.  Rule 602(e) provides that the Commission may waive this disqualification upon a 
showing of good cause.  
 
 Based on the representations set forth in CGMI’s request of March 17, 2005, the 
Commission has determined that a showing of good cause has been made pursuant to Rule 
602(e) and that the request for a waiver of the disqualification should be granted.  
 
 
 



 

 
 
 -2-

 
 Accordingly, IT IS ORDERED, pursuant to Rule 602(e) under the Securities Act, 
that a waiver from the application of the disqualification provision of Rule 602(c)(3) under 
the Securities Act resulting from the entry of the Order is hereby granted. 
 
            By the Commission. 
 
 
   
  Jonathan G. Katz 
  Secretary