SEC v. Citigroup Global Markets Inc. and Citigroup Inc. (mismarking, 2018)

Settled

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In August 2018 the SEC settled with Citigroup Global Markets Inc. and its parent Citigroup Inc. over a failure to supervise traders that let three traders on separate desks mismark opaque, illiquid positions from 2013 to 2016, two of them while concealing unauthorized Treasury trading losses, which made the firms' books and records inaccurate. The two firms jointly pay a $5.75 million civil penalty.

The record

What was ordered

Civil penalty

$5.8m

Disgorgement

—

Prejudgment interest

—

Total relief

$5.8m

Alleged gain

—

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars.

What is alleged to have happened

The Securities and Exchange Commission issued this settled order on August 16, 2018 in administrative proceeding 3-18647. The respondents are Citigroup Global Markets Inc. and Citigroup Inc. (0 individuals, 2 entities), who neither admitted nor denied the findings. Earlier versions of this record merged the two into a single entity.

The charge is a supervisory and record-keeping failure rather than a scheme by the firms. The order finds that between mid-2013 and early 2016 three traders on different desks overvalued opaque, illiquid positions, such as exotic credit-linked notes and non-agency mortgage securities, that Citi's valuation control group did not effectively price-verify. Two of the traders also made unauthorized U.S. Treasury trades whose losses the mismarks largely hid, for more than a year without detection. Citi found and reported each case to SEC staff between December 2014 and March 2016, which led to millions of dollars in losses being recognised or unrealised gains reversed.

The SEC found violations of Exchange Act Section 17(a) and Rules 17a-3 and 17a-5 by the broker-dealer and of Section 13(b)(2)(A) by the parent. Citigroup Global Markets was censured, and the two respondents must pay a $5,750,000 civil penalty jointly and severally.

For the regulator's own account of the facts, read the primary document linked above.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Mismarking — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2018-08-16 Administrative proceeding instituted (cease-and-desist)

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEC order

The linked release is a work of the United States government and is not subject to copyright. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added September 20, 2026. submit a correction.