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FINRA Orders Citi To Pay $1.2 Million For Excessive Markups And Markdowns

Today FINRA ( The Financial Regulatory Authority) fined Citi International Financial Services LLC, a subsidiary of Citigroup, Inc. $600,000 and ordered restitution to 3,600 customers totaling $648,000 for charging excessive markups and markdowns on bond transactions and other supervisory issues. Here is a link to the press release.

Markups and markdowns are the differences between what a broker pays or sells a bond for and what he sells or buys it from you for. It is the undisclosed profit ( the "spread") that firms make when buying and selling your bonds. For example, if the broker purchases a bond for $99 and sells it to you for $100, the markup is $1.

The SEC doesn't require brokers to disclose how much they make on bonds they sell to you. To protect yourself you may want to go to Investing in , enter the cusip number of the bond and get information about what the bond has been trading for recently. Generally 1-2% markup is ok.

In the Citi case, FINRA found that from July 2007 to September 2010, they had charged excessive markups and markdowns, ranging from 2.73-over 10%.

If you have questions about the way your brokerage account is being handled or have unexplained losses in your stock market account, please do not hesitate to contact us at 561 391 1900. We have been helping investors nationwide recover stock-market and investment losses for over twenty years.

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