The Financial Industry Regulatory Authority said it has fined Citigroup Inc.'s global markets division $300,000 for not adequately supervising the commissions its brokers were charging on stock and option trades.
The New York financial services company has offered to reimburse affected customers, though that offer was not part of the formal sanction.
Susan Merrill, the agency's enforcement chief and an executive vice president, said last week that Citi did not instruct its brokers and supervisors about how to compute commission charges that varied from its commission schedule.
"Firms have an obligation to supervise with a view to compliance with Finra rules as well as the firms' own policies and procedures, including those governing commissions on customer orders," Ms. Merrill said in a press release.
She also said the company did not have enough controls in place to prevent brokers from overcharging on commissions.
The biggest example highlighted by Finra involved Juan Carlos Hernandez, a trader for Citi, who was barred from brokerage this year for charging unreasonable commissions. The agency found that Mr. Hernandez "substantially" overcharged more than two dozen customers, one by about $1.2 million.
Citi said that it fired him in February 2006.
Finra said a study of Citi's transactions found a small number of options trades carried commission rates of more than 20%.
Citi did not admit or deny the charges, but it consented to Finra's findings.
