Citigroup Global Markets

Citigroup Global Markets was censured and fined $225,000 for effecting short sales for its own account without borrowing the security or entering into a bona fide arrangement to borrow the security, and without documenting its compliance with the locate requirement for short sale transactions.

The findings stated that the firm’s failure to obtain locates for these short sales resulted from system issues (which were later resolved) that failed to recognize short sales when the firm was selling short to facilitate customer orders as principal.

The firm also failed to establish, maintain and enforce written policies and procedures reasonably designed to prevent the execution or display of a short sale order in a covered security subject to a short sale circuit breaker at a price at or below the national best bid.

The firm largely relied on compliance filters in its trading platforms to prevent the execution of a short sale order at a price less than or equal to the national best bid during a short sale circuit breaker.