Securities Industry Commentator by Bill Singer Esq

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Kansas Court of Appeals Reverses Lower Court and Remands to FINRA Arbitration
Jennifer Suchan, Appellee, v. Brent Dome, et al., Appellants (Opinion, Court of Appeals for the State of Kansas, No. 125,673)
https://www.kscourts.org/KSCourts/media/KsCourts/Opinions/125673.pdf?ext=.pdf
As set forth in the Preamble to the Court of Appeals Opinion:

PER CURIAM: Brent Dome and Waddell & Reed Financial Services, Inc. (Waddell & Reed), appeal the denial of their motion to compel arbitration in a negligence suit filed against them by Jennifer Suchan. They claim the district court erred in denying their motion because Suchan and her late husband, Matthew, previously signed valid agreements which contained an arbitration clause and Suchan readily acknowledges doing so. Dome and Waddell & Reed contend an additional error occurred when the district court declined to allow an arbitrator to decide the scope and intent of that undisputed arbitration clause. Following a thorough review of the record and the claims raised, with the controlling legal framework as a backdrop, we conclude the district court's ruling against Dome and Waddell & Reed must be overturned. That outcome is driven by our determination that the district court turned a blind eye to undisputed evidence when it concluded that the arbitration clause set out in the Agreements the couple individually signed was unenforceable in this situation. Our decision also arises out of a finding that the district court erred in refusing to allow an arbitrator to decide whether the dispute between the parties fell within the scope of the arbitration provision. Accordingly, this case is reversed and remanded.

In pertinent part, this is the underlying fact pattern:

Jennifer Suchan's late husband, Matthew, was previously married to Dorothy Gillett-Payne. During that relationship, Matthew purchased a life insurance policy through Genworth Life and Annuity Insurance Company (Genworth Policy) and designated Gillett-Payne as the beneficiary. The Genworth Policy was later brokered and sold to Brent Dome, a registered financial advisor with Waddell & Reed.

The union between Matthew and Gillett-Payne eventually dissolved and several years later Matthew and Jennifer married. The new couple met with Dome for the express purpose of taking the steps required to change the beneficiary designation from GillettPayne to Jennifer (Suchan) on all products Matthew purchased through Dome and Waddell & Reed. At the conclusion of their meeting, Dome assured the couple that all necessary measures were completed to name Suchan the beneficiary.

. . .

The Negligence Lawsuit

Roughly two years after the MAP Agreements were executed, Matthew passed away due to complications from COVID-19. Shortly after his passing, Suchan learned that Gillett-Payne remained listed as the beneficiary on Matthew's life insurance policy, despite Dome's assurances two years earlier that the couple had completed all requirements to ensure Suchan's name replaced Gillett-Payne's in that regard. Suchan later alleged that, because of Dome's failure to change the named beneficiary she was unable to recover the full amount due to her under the policy.

DOJ

Co-Founder Of Multibillion-Dollar Cryptocurrency Scheme “OneCoin” Sentenced To 20 Years In Prison / OneCoin Was a Fraudulent Cryptocurrency Marketed and Sold to Millions of Victims Around the World, Resulting in Billions of Dollars in Losses(DOJ Release)
https://www.justice.gov/usao-sdny/pr/co-founder-multibillion-dollar-cryptocurrency-scheme-onecoin-sentenced-20-years-prison
In the United States District Court for the Southern District of New York, KARL SEBASTIAN GREENWOOD, 46, (the Co-founder of OneCoin with RUJA IGNATOVA, a/k/a “the Cryptoqueen,”) pled guilty to one count of conspiracy to commit wire fraud; one count of wire fraud; and one count of conspiracy to commit money laundering; and he was sentenced to 20 years in prison and ordered to pay approximately $300 million in forfeiture. As alleged in part in the DOJ Release:

GREENWOOD and IGNATOVA co-founded OneCoin Ltd. (“OneCoin”) in 2014. OneCoin was based in Sofia, Bulgaria. OneCoin marketed and sold a fraudulent cryptocurrency by the same name. OneCoin began operating in the United States in or around 2015. Between the fourth quarter of 2014 and the fourth quarter of 2016 alone, the scheme took in more than $4 billion from at least 3.5 million victims.

OneCoin marketed its fake cryptocurrency through a global MLM network of OneCoin members. GREENWOOD conceived of OneCoin’s use of an MLM structure and was OneCoin’s global master distributor and the leader of the MLM network through which the fraudulent cryptocurrency was marketed and sold. Through the MLM structure, OneCoin members received commissions for recruiting others to purchase cryptocurrency packages. As the top MLM distributor of OneCoin, GREENWOOD earned 5% of monthly OneCoin sales from anywhere in the world, which totaled more than $200 million from the fourth quarter of 2014 through the fourth quarter of 2016 alone and exceeded approximately $300 million in total. GREENWOOD’s mastery as a salesman and the use of the MLM structure helped contribute to OneCoin’s rapid growth and incredible success.

From OneCoin’s inception, GREENWOOD and IGNATOVA used the notoriety of Bitcoin to convince investors that OneCoin was the next “can’t miss” investment opportunity. GREENWOOD and IGNATOVA wanted investors to believe that OneCoin was a legitimate cryptocurrency like Bitcoin and deliberately drew the comparison between the two cryptocurrencies through their representations to investors and their marketing materials. For example, in a OneCoin PowerPoint presentation prepared by GREENWOOD, OneCoin described itself as “a unique and innovative cryptocurrency, that is born on the success of the pioneering and famous cryptocoin, Bitcoin.” In another slide, OneCoin highlighted the explosive growth of Bitcoin, stating that “Bitcoins increased their value 75 times in 2013,” and including the following quote from The Guardian newspaper, “Man buys $27 of bitcoin, forgets that he had bought and finds that they’re now worth $886,000.”

In reality, unlike legitimate cryptocurrencies, OneCoin had no actual value and was conceived of by GREENWOOD and IGNATOVA as a fraud from day one. The misrepresentations made by GREENWOOD and others to OneCoin investors were legion, and the cryptocurrency was worthless. Among other things, OneCoin lied to its members about how its cryptocurrency was valued, claiming that the price of OneCoin was based on market supply and demand, when in fact OneCoin itself arbitrarily set the value of the coin without regard to market forces. The purported value of a OneCoin grew steadily from €0.50 to approximately €29.95 per coin, as of in or about January 2019. The purported price of OneCoins never decreased in value.

GREENWOOD also lied to investors about the utility of the tokens included in trader packages, claiming that they could be used to secure positions in OneCoin’s “mining pools,” depicted in promotional materials as computer hardware used to “mine” OneCoins. But there were no mining pools and no computers to mine OneCoin either. GREENWOOD knew that this lie was essential to convincing investors that OneCoin was a legitimate cryptocurrency. As he wrote in an email to IGNATOVA, “[t]he concept of converting tokens into OneCoin is an important phase for validity and truth behind the OneCoin. The so called ‘mining’ of coins is a concept that is very familiar in the industry and a story we can sell to the members.” However, as GREENWOOD and IGNATOVA both knew, OneCoin was “not mining actually—but telling people shit.” In the same email exchange, GREENWOOD asked IGNATOVA, “how can this be investigated and found out?” and “Can any member (trying to be clever) find out that we actually are not investing in machines to mine but it is merely a piece of software doing this for us?”

OneCoin also claimed to have a private “blockchain,” or a digital ledger identifying OneCoins and recording historical transactions. But, in reality, OneCoin lacked a true blockchain — that is, a public and verifiable blockchain. Indeed, by approximately March 2015, GREENWOOD and IGNATOVA had started allocating to members OneCoins that did not even exist in OneCoin’s purported private blockchain, referring to these coins as “fake coins.” By at least June 2015, GREENWOOD and IGNATOVA began emailing one another models tabulating current and projected future trader package sales volumes along with outstanding tokens and OneCoins. The spreadsheets identified separate lines for “mined coins,” “mined coins (real),” and “fake coins.” The references to “fake coins” in those records referred to OneCoins that had been distributed to members but did not exist on the OneCoin “blockchain.” Two months later, in August 2015, IGNATOVA wrote to GREENWOOD, in an email with the subject line, “I am afraid this is an issue,” “This is the implication from the big sales 4 weeks ago. 1.3 [billion] fake coins. We are fucked, this came unexpected and now needs serious, serious thinking.”

On July 4, 2015, IGNATOVA announced the official opening of the United States market for OneCoin during an online webinar. During the webinar, IGNATOVA said, among other things: “[I]f we want to go and catch Bitcoin, we never can do this without being strong in the U.S. and without being part of the community. So, um, this is actually why I am so excited about the U.S. as the market. It’s something that is about prestige. It’s a huge market. And, um, it is, I think, a place of innovation, of Wall Street, a place where we have to be if we want to be big.”

Many victims in the United States invested in fraudulent OneCoin cryptocurrency packages, including residents of the Southern District of New York. In total, more than 3.5 million victims invested in OneCoin and lost more than $4 billion dollars from the scheme —money that GREENWOOD, IGNATOVA, and others used to fund extravagant lifestyles. As the top MLM distributor of OneCoin, GREENWOOD earned more than $300 million during the scheme, much of which he spent on his own lavish lifestyle. For example, in or around December 2015, GREENWOOD used approximately $10,000 of fraud proceeds to stay at an exclusive five-star resort in Brazil. Later that month, GREENWOOD used an additional $21,000 of fraud proceeds to stay at a luxury villa with a beach view in Koh Samui, Thailand. Later, when GREENWOOD traveled to Barcelona in May 2016, he used investor funds to stay at another luxury five-star hotel and rented a Range Rover for the duration of his trip.

GREENWOOD also used proceeds from the scheme to purchase luxury designer clothes, footwear, and watches totaling approximately $2 million; pay a down payment of approximately 475,000 British Pound Sterling for a Sunseeker yacht; and to purchase real estate properties in various countries, including in Spain, Dubai, and Thailand. Finally, GREENWOOD used investor funds to travel around the world on a private “OneCoin” airplane and posted promotional videos of his travel online.

GREENWOOD was arrested at his residence on the island of Koh Samui, Thailand, in July 2018 and was extradited to the United States to face fraud and money laundering charges in October 2018. GREENWOOD has been detained since his arrest in July 2018.

On October 12, 2017, IGNATOVA was charged with OneCoin-related fraud and money laundering charges in the U.S. District Court for the Southern District of New York, and a federal warrant was issued for her arrest. On October 25, 2017, IGNATOVA traveled on a commercial flight from Sofia, Bulgaria, to Athens, Greece, and has not been seen publicly since. IGNATOVA was added to the FBI’s Top Ten Most Wanted List in June 2022. The FBI is offering a $100,000 reward for information leading to IGNATOVA’s arrest.

SEC

Testimony of Chair Gary Gensler Before the United States Senate
Committee on Banking, Housing, and Urban Affairs (Sept. 12, 2023)
https://www.banking.senate.gov/imo/media/doc/gensler_testimony_9-12-23.pdf

SEC Files Settled Fraud Charges Against Los Angeles-Based "Smart Ring" Company and Its Principal (SEC Release)
https://www.sec.gov/litigation/litreleases/lr-25826
Without admitting or denying the allegations in an SEC Complaint
https://www.sec.gov/files/litigation/complaints/2023/comp25826.pdf, Esos Rings, Inc., and its Principal Michelle Silverstein a/k/a Michelle Silverstein Bisnoff consented to the entry of final judgments that would permanently enjoin them from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Act and Rule 10b-5 thereunder and hold them jointly and severally liable to pay disgorgement of $566,483 in disgorgement and $46,836 in prejudgment interest. Further, Bisnoff consented to an officer-and-director bar, a $233,229 civil penalty, and a permanent injunction prohibiting her from directly or indirectly, including, but not limited to, through any entity owned or controlled by her, participating in the issuance, purchase, offer, or sale of any security in an unregistered offering, provided, however, that such injunction shall not prevent Bisnoff from purchasing or selling securities listed on a national securities exchange for her own personal account. As alleged in part in the SEC Release:

[F]rom February 2017 to June 2022, Esos and Bisnoff fraudulently raised $1.95 million from investors. The complaint alleges that Esos was purportedly in the business of manufacturing and selling smart rings, which were wearable rings that functioned as a debit card. As alleged in the complaint, Esos and Bisnoff raised money from investors through false statements, including that Esos owned the patents for the smart rings and that Esos was being acquired by Apple. The complaint also alleges that Esos and Bisnoff operated a Ponzi-like scheme by using new investor money to pay off previous investors.

SEC Charges North Carolina Man and Entities He Controlled with Fraud (SEC Release)
https://www.sec.gov/litigation/litreleases/lr-25825
In the United States District Court for the Eastern District of North Carolina, the SEC fled a Complaint that charges Dharma Teja Nukarapu and SharkDreams, Inc. with violating Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act, and Rule 10b-5 thereunder, and, in the alternative, charges that Nukarapu was liable as a control person for violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by SharkDreams and D Dollar, pursuant to Section 20(a) of the Exchange Act. Additionally, the Complaint charges D Dollar Inc. with violations of Sections 17(a)(1) and (3) of the Securities Act, Section 10(b) of the Exchange Act, and Rules 10b-5(a) and (c) thereunder. As alleged in part in the SEC Release:

[S]harkDreams and Nukarapu made multiple false and misleading statements to current and prospective investors in connection with the offer and sale of SharkDreams securities, including that prior investors had doubled their money in a year, that SharkDreams was valued at as much as $7 million to $30 million, that SharkDreams had customer orders for its LIVIT products, and that it had a large investor who would buy out all of the remaining SharkDreams shares to infuse capital. Allegedly, none of this was true. The SEC's complaint further alleges that SharkDreams never received any revenue from any LIVIT product sales, there was no factual basis for a valuation in the range Nukarapu touted, and there was never a bona fide offer to buy out SharkDreams shares. The SEC's complaint also alleges that, in 2019 and 2020, D Dollar raised at least $650,000 from investors. According to the SEC's complaint, investors were told that the funds would be used for a purported D Dollar subsidiary; but Nukarapu misappropriated approximately $595,000 of investor proceeds to fund SharkDreams operations and for his personal uses.

SEC Obtains Final Judgment Against Canadian Individual in Fraudulent Microcap Scheme (SEC Release)
https://www.sec.gov/litigation/litreleases/lr-25824
The United States District Court for the Southern District of New York entered a Final Hudgment
https://www.sec.gov/files/litigation/litreleases/2023/judg25824.pdf against George Stubos that orders him to pay over $6 million. As alleged in part in the SEC Release:

[S]tubos secretly gained control of several thinly traded microcap companies whose stock was publicly traded in the U.S. securities markets, hired stock promoters to create demand for his stock, and generated substantial illicit profits by selling the stock to unsuspecting investors. Stubos allegedly hid the fact that he controlled the majority of the stock of the publicly traded companies. He allegedly misled investors, brokers, and transfer agents (companies that maintain records of stock ownership) in order to convince these parties that his stock shares were eligible for trading in the public markets, when in fact he did not register his sales of those stock with the Commission and did not disclose accurate information about his control over the companies. Stubos also engaged in manipulative trading to create the appearance of active market trading and thus increased investor demand for the stock. The court entered the final judgment against Stubos by consent. Stubos, without admitting or denying the allegations in the SEC's complaint, consented to a final judgment that permanently enjoins him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and the market manipulation provisions of Section 9(a) of the Exchange Act. Stubos' judgment orders him to pay disgorgement of $5,367,926 and prejudgment interest of $806,108 and it imposes a penny stock bar and a conduct-based injunction that prohibits Stubos from participating in the issuance, purchase, offer, or sale of any security other than for his own personal accounts. The complaint also seeks relief from Dori-Ann Stubos, George Stubos' wife, who allegedly received illicit proceeds from Stubos' fraudulent scheme, and that action remains ongoing.

SEC Charges Alternative Investment Platform YieldStreet for Misleading Investors (SEC Release)
https://www.sec.gov/news/press-release/2023-175
Without admitting or denying the findings in an SEC Order
https://www.sec.gov/files/litigation/admin/2023/33-11230.pdf that it had violated certain antifraud and other provisions of the federal securities laws, YieldStreet Inc. and its registered investment adviser YieldStreet Management LLC. agreed to cease and desist from the alleged violations and to pay over $1.9 million in penalties, disgorgement, and interest. As alleged in part in the SEC Release:

[A]ccording to the SEC’s order, in September 2019, YieldStreet offered securities to finance a loan a YieldStreet affiliate made to a group of companies to transport a retired ship and arrange its deconstruction. The SEC’s order finds that the collateral for the loan was the ship to be deconstructed and that YieldStreet’s right to the ship was the most important security for the loan and the securities that YieldStreet sold to investors.

According to the order, YieldStreet failed to disclose to investors a heightened risk that it would be unable to seize the ship in the event of a default. The order finds that, prior to the offering, YieldStreet personnel had information showing that ships securing other loans that YieldStreet affiliates had made to the same borrowing group were reported as deconstructed without any notice or repayment or could not be located because their tracking systems were off. According to the order, YieldStreet proceeded with the offering without disclosing this material information to investors. The order states that YieldStreet later concluded that the borrowing group caused the ship securing the September 2019 offering to be deconstructed, but it stole the deconstruction proceeds by not repaying the loan from YieldStreet, leaving investors facing millions of dollars of losses.

Investment Adviser Charged for Acting as an Unregistered Broker (SEC Release)
https://www.sec.gov/enforce/34-98354-s
Without admitting or denying the findings in an SEC Order https://www.sec.gov/files/litigation/admin/2023/34-98354.pdf
that it violated the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act, True Capital Management, LLC agreed to a cease-and-desist order, a censure, disgorgement of $594,897 plus prejudgment interest of $76,896, and a $150,000 civil penalty to settle the charges. As alleged in part in the SEC Release:

[T]rue Capital created and was the investment adviser to funds in which its individual clients invested. For at least nine years, the order finds, True Capital regularly received transaction-based compensation for arranging sales of real estate investments to its individual and fund clients. The order further finds that True Capital solicited its individual clients to buy real estate investments, gave them advice about the investments, negotiated the terms of the investments, and sometimes sent the investors' money to the sellers. Between September 2017 and June 2021, according to the order, True Capital was paid by sellers or by its own fund clients for performing these brokerage activities in at least 27 transactions. The order finds that True Capital charged advisory fees to its clients in addition to this transaction-based compensation.

SEC Charges National Office Partner at Marcum for Causing Widespread Quality Control Deficiencies (SEC Release)
https://www.sec.gov/news/press-release/2023-174
Without admitting or denying the findings in an SEC Order
https://www.sec.gov/files/litigation/admin/2023/34-98352.pdf that he had engaged in improper professional conduct within the meaning of Section 4C(a)(2) of the Securities Exchange Act of 1934 and Rule 102(e) of the SEC’s Rules of Practice and that he had caused Marcum LLP to violate Rule 2-02(b)(1) of Regulation S-X., former Marcum LLP National Assurance Services Leader Alfonse Gregory Giugliano consented to cease and desist from committing or causing any violations and any future violations of Rule 2-02(b) of Regulation S-X and to pay a civil penalty of $75,000; and, further, he agreed to a Censure and to comply with certain undertakings for a period of three years, including having no leadership, management, oversight, or supervisory position at any registered public accounting firm. As alleged in part in the SEC Release:

[G]iugliano oversaw quality control for Marcum’s public company practice, including the firm’s relevant quality control policies, procedures, and monitoring, and directly or indirectly supervised all personnel working within Marcum’s quality control functions. The SEC’s order finds that exponential growth in Marcum’s public company practice exposed substantial deficiencies in these functions. Moreover, according to the SEC’s order, Giugliano was aware that inspections by the Public Company Accounting Oversight Board (PCAOB) and by Marcum itself revealed numerous deficiencies in Marcum’s quality control system. The SEC’s order finds that Giugliano did not sufficiently address and remediate these deficiencies, leading to quality control and audit standard violations throughout Marcum’s audit work, such as client acceptance, engagement partner supervision and review, audit documentation, and technical consultations. In addition, under Giugliano’s leadership of Marcum’s quality control system, the firm did not sufficiently monitor the effectiveness of many policies and procedures and, in many areas, did not adequately communicate those policies and procedures to relevant personnel.

SEC Charges Maximus for Reporting and Proxy Violations (SEC Release)
https://www.sec.gov/enforce/34-98351-s
Without admitting or denying the findings in an SEC Order
https://www.sec.gov/files/litigation/admin/2023/34-98351.pdf that it violated Sections 13(a) and 14(a) of the Securities Exchange Act and Rules 13a-1 and 14a-3 thereunder, Maximus Inc. agreed to pay a civil money penalty of $500,000. As alleged in part in the SEC Release:

[M]aximus appointed a business segment leader and longtime employee as an executive officer in 2019. The officer's two siblings were also employees of Maximus who received annual compensation in excess of the threshold specified by SEC regulations regarding the disclosure of transactions with related persons. Maximus was therefore required to disclose the employment of the officer's siblings in its annual filings. However, Maximus filed annual reports and proxy statements for fiscal years 2019 through 2021 that did not include these required disclosures.

SEC Sweep into Marketing Rule Violations Results in Charges Against Nine Investment Advisers (SEC Release)
https://www.sec.gov/news/press-release/2023-173
Without admitting or denying the findings in an SEC Orders,

agreed to be censured, cease and desist from violating the charged provisions, comply with undertakings not to advertise hypothetical performance without having the requisite policies and procedures, and pay civil penalties ranging from $50,000 to $175,000. As alleged in part in the SEC Release:

Registered investment advisers are prohibited from including any hypothetical performance in their advertisements unless they have adopted and implemented policies and procedures reasonably designed to ensure that the hypothetical performance is relevant to the likely financial situation and investment objectives of the intended audience of the advertisement. The SEC’s orders find that each of the charged firms advertised hypothetical performance to mass audiences on their websites without having the required policies and procedures. In addition, two of the advisers, Macroclimate LLC and MRA Advisory Group, failed to maintain required copies of their advertisements.

SEC Charges Chicago-Based Broker-Dealer with Violations of Regulation SHO (SEC Release)
https://www.sec.gov/enforce/34-98346-s
Without admitting or denying the findings in an SEC Order
https://www.sec.gov/files//litigation/admin/2023/34-98346.pdf that it willfully violated Rule 203(b)(1) of Regulation SHO, Simplex Trading, LLC agreed to a cease-and-desist order, a censure and to pay a civil money penalty of $200,000. As alleged in part in the SEC Release:

[F]rom at least October 2018 through December 2020, Simplex violated Regulation SHO by engaging in opportunistic, proprietary options trading and executing short sales of millions of shares of the underlying stocks to hedge that trading without locating shares of those stocks to borrow in improper reliance upon the bona-fide market making exception to the locate requirement set forth in Regulation SHO. As described in the order, Simplex did not qualify for the bona-fide market making exception to the locate requirement because Simplex was not engaged in bona-fide options market making activity at the time of its short sales in the underlying stock. In particular, the order finds, Simplex did not post continuous options quotations at or near both sides of the market and incurred limited economic or market risk because its options quotes were very rarely at or near the national best bid and offer. In addition, the order finds that Simplex's short selling in the underlying stock was not bona-fide market making because it was done to hedge Simplex's speculative, proprietary options trading strategies.

SEC Denies Whistleblower Award to Claimant
Order Determining Whistleblower Award Claim ('34 Act Release No. 34-98340; Whistleblower Award Proc. File No. 2023-83)
https://www.sec.gov/files/rules/other/2023/34-98340.pdf
The Office of the Whistleblower ("OWB") issued a Preliminary Final Summary Disposition ("PFSD") recommending the denial of a Whistleblower Award to Claimant 2. The Commission ordered that OWB's recommendations be approved. The Order asserts in part that:

As an initial matter, the record shows that Claimant 2’s information did not cause Enforcement staff to open the investigation. Enforcement staff confirms, in a sworn declaration, which we credit, that the Matter Under Inquiry that resulted in the Covered Action was opened in Redacted based on an initiative of Enforcement staff and not due to any information provided by Claimant 2, whose first tip to the Commission was submitted more than a year later . . .

FINRA

FINRA Censures and Fines Citigroup Global Markets, Inc. for Inaccurate Trade Capacity
In the Matter of Citigroup Global Markets Inc., Respondent (FINRA AWC 2019062946601)
https://www.finra.org/sites/default/files/fda_documents/2019062946601
%20Citigroup%20Global%20Markets%2C%20Inc.%20CRD%207059%20AWC%20lp.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Citigroup Global Markets Inc. submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Citigroup Global Markets Inc.was first registered in. In accordance with the terms of the AWC, FINRA imposed upon Citigroup Global Markets Inc. a Censure and $250,00 fine. As alleged in part in the AWC:

From October 2016 to July 2020, the firm incorrectly designated CitiBLOC ATS customer orders that crossed with the firm's principal orders as "Cross as Agent" trades when they should have been designated as principal trades^.2 Accordingly, the firm disclosed inaccurate trade capacity codes on approximately 37,000 trade confirmations.Therefore, Respondent violated Exchange Act Rule 10b-10, Exchange Act Section 17(a), Exchange Act Rule I 7a-3(a)(8), and FINRA Rules 2232, 4511, and 2010.

= = =

Footnote 2: CGMI remedied this issue with a logic correction implemented on July 13, 2020.

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