Citigroup Global Markets Inc. agreed to pay $500,000 for failing to prevent a former sales assistant from taking about $750,000 from 22 clients over eight years, according to regulators.
Tamara Moon, who was a registered sales assistant in a Palo Alto, Calif., Smith Barney branch office, misappropriated funds from accounts of clients who were ill, elderly or otherwise vulnerable and not able to monitor their financial accounts, the
Financial Industry Regulatory Authority Inc. said.
From January 2001 through March 2008, she falsified account records and traded securities in customer accounts without authorization and
Citigroup failed to detect or respond to “a series of red flags” that would have alerted the company to her actions, Finra said.
Ms. Moon took advantage of
Citigroup's “supervisory lapses at the branch” and improperly used funds of elderly widows, a senior citizen who suffered from Parkinson's disease, and her own father, whose name she used to set up a fraudulent account, according to the complaint.
In a written response to a request for comment,
Citigroup said that it will help any way it can to make sure that Ms. Moon is prosecuted “to the fullest extent of the law.” The company neither admitted nor denied the allegations in settling the case.
“In 2008, upon discovering suspicious activity by a former Smith Barney employee, we immediately notified the authorities, terminated her employment and reimbursed impacted clients,”
Citigroup said in the response. “Protecting our customers is paramount, and fraudulent behavior will not be tolerated.”
Among the problems that Finra cited was a finding that
Citigroup relied on unverified responses from Ms. Moon to resolve differences identified in Experian Reports about new account addresses and phone numbers. The firm also “failed to follow up” when she used
Social Security numbers that belonged to deceased customers to open up new accounts, according to Finra.
Ms. Moon was barred from associating with any Finra member in any way back in April 2009. She neither admitted nor denied the allegations in settling the case.
In April 2009,
Citigroup agreed to pay a $250,000 fine set by a
New York Stock Exchange hearing panel for failing to establish supervisory controls at this same Palo Alto Smith Barney branch office, according to Finra.
