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Oct 10, 2013

Citigroup fined $30 million for report leak

Citi analyst Kevin Chang shared unpublished research about major supplier of Apple iPhones

Citigroup is set to pay a $30 million fine after one of its Taiwan unit analysts improperly shared non-public information with major clients.



Confidential information released by analyst Kevin Chang in December 2012 included lower order forecasts for Apple iPhones for the first quarter of 2013, which would have had a detrimental effect on Apple, according to William Galvin, Massachusetts’ Secretary of the Commonwealth.


Detailing a number of email requests sent to Chang, the regulator says Chang emailed non-public information to major clients including SAC, T Rowe Price, Citadel and GLG Partners. After receiving the information on Hon Hai Precision Industry – a major supplier of Apple iPhones – SAC, Citadel and T Rowe Price each sold Apple stock, according to Galvin’s complaint.



‘The Citi analyst should not have been that accessible to the clients. He should have been better protected by the compliance team,’ Galvin says.



While no criminal charges were filed, Galvin’s office filed civil charges against Citi for ‘failing to supervise’. The $30 million fine is the result of a settlement, which comes only a year after Citi was fined $2 million for improperly disclosing research on Facebook’s IPO. The second fine comes at a much higher price following Citi’s breach of its agreement to ‘cease and desist from further violations’ after its Facebook IPO fine.



The bank takes ‘regulatory compliance requirements very seriously and train(s) all of our employees about these obligations,’ a spokesperson for Citi told Reuters.



According to the complaint, Chang’s employment at Citi was terminated last month.

Garnet Roach

Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of subjects, from technology to...

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