Citigroup fined $3.5m on wrong subprime data

WASHINGTON - The US financial watchdog announced on Tuesday that it had fined Citigroup $3.5 million for providing inaccurate mortgage performance information and supervisory failures in connection with subprime residential mortgage-backed securitizations (RMBS).

Citigroup Global Market, the brokerage and securities arm of banking behemoth Citigroup, failed to correct information for three RMBS from January 2006 through October 2007, and it remained on Citigroup's website until early May 2012, the Financial Industry Regulatory Authority (Finra) said in a statement.

The brokerage industry's self-regulator said historical data on mortgage performance was material to investors in assessing the value of RMBS and in determining whether future returns may be disrupted by mortgage holders' failures to make loan payments.

In addition, Citigroup failed to supervise mortgage-backed securities pricing because it lacked procedures to verify the pricing of these securities and did not sufficiently document the steps taken to assess the reasonableness of trader's prices.

Citigroup settled the claims without admitting or denying wrongdoing. It is a boilerplate clause that Finra and other financial regulators regularly refer to for accelerating the case settlement.

Finra is a private corporation that acts as a self-regulatory organization and is the largest independent regulator for all securities firms doing business in the United States.