March 20, 2012
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 FINRA 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 purchasesd 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 Bonds.com , 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, call to discuss your options.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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