The charge was failure to disclose conflicts of interest in research reports and at analysts' public appearances, and Citigroup Global Markets, Inc. was the 'culprit'.  And the cause, according to FINRA, had little if anything to do with human oversight or error, but to technical deficiencies.  These violations resulted in a $725K fine. The obligation to disclose alleged conflicts of interest pertained to certain relationships that Citigroup and/or its affiliates had with issuers over a 3-year period - from January 2007 through March 2010.

• Citi had managed or co-managed public securities offerings for which it received investment banking or other revenue;
• Citi made a market in the securities of and/or had a 1% or greater beneficial ownership in covered companies.

According to Brad Bennett, FINRA EVP and Enforcement Chief:  "Citigroup failed to make required conflict of interest disclosures which prevented investors from being aware of potential biases in its research recommendations. ..." Attributed to Technical Deficiencies. Interestingly enough, FINRA found that Citigroup failed to make the required disclosures because the database it used to identify and create the disclosures was inaccurate and/or incomplete due primarily to technical deficiencies.  This, compounded with Citigroup's failure to have reasonable supervisory procedures in place to ensure that the firm was populating its research reports with required disclosures, enabled the violations to continue for more than 3 years. In this settlement, Citi neither admitted nor denied the charges, but consented to the entry of FINRA's findings. Factors in Determining Sanction. FINRA  took into consideration several  factors, among other things, in settling the violations at $375K:

• CGMI  self-reported several of the disclosure deficiencies set  forth  herein;
• CGMI took remedial action with respect to these disclosure deficiencies, including  conducting comprehensive internal reviews of its disclosure management system in 2006-2007 and 2009-2010 that revealed certain of the disclosures deficiencies cited by FINRA;  and
• in early 2010, the Firm engaged an independent consultant to review and make recommendations for improvement of the disclosure management system.

FINRA Staff Credits. Investigation by Jeanne Elmadany, supervised by Susan Light, Enforcement Chief Counsel.    [FINRA News Release, 1/18/12] For further details, go to:   [FINRA AWC #20080123101]