Citigroup unit fined over hedge fund sales material

The NASD censured and fined Citigroup Global Markets $250,000 in a settlement of charges that the firm distributed inappropriate hedge funds-of-funds sales material to retail clients of its broker-dealer division. In a statement, the National Association of Securities Dealers said more than 100 marketing materials cited a targeted return without "providing a sound basis for evaluating the target," improperly used hypothetical returns in charts and graphs, and did not provide adequate risk disclosure between July 1, 2002, and June 30, 2003. Citigroup did not formally admit or deny the NASD's allegations, although Kim Atwater, spokeswoman, said, "Citigroup took immediate action and cooperated fully to make sure our materials comply with NASD guidance." She said it is important to note that only existing clients of the Citigroup hedge funds of funds and qualified investors received the marketing materials examined by the NASD.