(Reuters) - The Financial Industry Regulatory Authority (FINRA) has fined Citigroup Global Markets $3.5 million for providing inaccurate information related to subprime securitizations.
The brokerage and securities arm of Citigroup posted inaccurate mortgage performance data on its website from January 2006 to October 2007, the regulator said in a statement, adding that the data remained on the website until this month.
“Citigroup posted data for its RMBS deals that it should have known was inaccurate; and even after they learned that the data was inaccurate, Citigroup did not correct the problem until years later,” said Brad Bennett, FINRA executive vice president and chief of enforcement.
RMBS are securities backed by mortgages on residential rather than commercial real estate.
Investors use historical data on past securitizations that contain mortgage loans similar to those in the RMBS being offered by the issuer, to assess the value of the security.
In this case, “investors potentially used faulty data to assess the value of the RMBS for over six years,” Bennett said.
FINRA said Citigroup also failed to supervise mortgage-backed securities pricing as it lacked procedures to verify them and did not sufficiently document the steps taken to assess traders’ prices.
Citigroup neither admitted nor denied the charges, but consented to the entry of FINRA’s findings, the regulator said.
Reporting by Aman Shah in Bangalore; Editing by Joyjeet Das