The SEC settled cease-and-desist proceedings with broker-dealer Citigroup Global Markets Inc. — as the agency said it violated record-keeping requirements related to its underwriting business — and settled charges against Archipelago Trading Services Inc. related to missing reports of suspicious financial transactions, the SEC announced Tuesday.
The federal regulator found that "from at least 2009 through May 2019, CGMI (Citigroup Global Markets Inc.) used an unsubstantiated and unverified method to calculate and record indirect expenses associated with its work as an underwriter," so that "for at least a decade, CGMI did not know the basis of this indirect expense calculation method" and never conducted a review of any kind to verify the method was appropriate, according to a news release.
Without admitting or denying the findings, Citigroup agreed to the cease-and-desist order, a censure and a civil payment of $2.9 million, the SEC said.
A spokesman for Citigroup declined to comment.
The SEC charged Archipelago Trading Services, a Chicago-based broker-dealer, with failing to file more than 400 legally required reports of suspicious financial transactions, known as Suspicious Activity Reports.
The SEC found that Archipelago "failed to establish an anti-money laundering surveillance program for its transactions" in over-the-counter securities executed on its alternative trading system until September 2020. Therefore, Archipelago failed to file at least 461 Suspicious Activity Reports between August 2012 and September 2020, according to a separate news release.
Without admitting or denying the findings, Archipelago agreed to a censure, cease-and-desist order, and a payment of $1.5 million to settle the charges.
Archipelago could not be reached for comment.
