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Home > Blog > Citigroup to Pay $30M Fine to Mass. Regulators

Citigroup to Pay $30M Fine to Mass. Regulators

In a settlement announced Wednesday, Citigroup Global Markets has agreed to pay a $30 million fine to Massachusetts regulators to settle charges that a former Citi analyst in Taiwan improperly shared research with four major clients one day before making that information available to all of the firm’s clients.

Massachusetts Secretary of State William Galvin said in a statement that by giving the information to a select large U.S. hedge fund and institutional clients in advance, it allowed them to profit from weaker sales of Apple iPhones.

The $30 million fine is one of the biggest that state securities regulators have collected to date and more than 15 times the $2 million fined to Citi one year ago for improperly disclosing research on Facebook’s initial public offering.

As reported by Reuters, former Citigroup analyst Kevin Chang emailed the unpublished research about Hon Hai Precision Industry Co., a major supplier of Apple Inc. iPhones, to SAC Capital Advisors (a group of hedge funds founded by Steven A. Cohen in 1992), T. Rowe Price, Citadel and GLG Partners.

Among other things, Chang’s research included lower order forecasts for Apple’s iPhones in the first quarter of 2013, which would have had a detrimental effect on Apple, Massachusetts Secretary of State William Galvin said.

After receiving the information from Chang, SAC, Citadel and T. Rowe Price all sold Apple stock, the complaint alleges.

Chang, who worked for Citigroup in Taiwan, was terminated last month, the complaint noted.

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