A subsidiary of New York-based Citigroup Inc. has agreed to pay Indiana $717,000 for not properly supervising a former agent, the state's Securities Division announced Monday.
Citigroup Global Markets agreed to pay the Securities Division $400,000 in fines, $142,000 in restitution and $175,000 in other costs, without admitting fault, following a three-year investigation.
The fines and penalties stem from allegations the firm failed to monitor former agent Mark Singer, a registered representative of Smith Barney, a former branch of Citigroup Global Markets.
Singer is currently awaiting trial in Marion County after being accused of working with Robert Nelms. Nelms was sentenced in Indiana to eight years in community corrections earlier this year for pleading guilty to securities fraud involving a $24 million cemetery trust fund operated by Indianapolis-based Memory Gardens Management Corp. In July, a Michigan judge sentenced Nelms to between 32 months and 10 years in prison for embezzling $4.2 million from a Grand Rapids cemetery.
Singer also is facing trial in Tennessee on related charges.
“This is one of the largest fines levied against one company by the Securities Division,” Indiana Secretary of State Todd Rokita said in a written statement. “This fine is a consequence of what we believe is the company’s failure to supervise an investment situation affecting Hoosiers."
Under Indiana law, companies must “reasonably supervise an agent, investment adviser representative, or other individual.” Companies failing to keep proper supervision of their advisers, even for non-company related business, may be subject to disciplinary consequences by the Indiana Securities Division.