Citigroup Slammed for $2.4M in Florida
A Financial Industry Regulatory Authority (FINRA) arbitration panel in Boca Raton, Florida has ordered Citigroup Global Markets, Incorporated to pay $2.4 million to a family trust for losses it suffered. The trustees had asserted various causes of action including suitability, negligence, misrepresentations, breach of fiduciary duty and failure to supervise, among others.
After the conclusion of the evidentiary hearing the panel entered its award which found Citigroup negligent and ordered it to pay the elderly trustees of a family trust $2,388,230 in compensatory damages. In addition to compensatory damages, the panel assessed the entire $32,400 in forum fees against the Respondent, Citigroup. (FINRA# 09-06918; Marvin Leiter and Beverly Leiter as Trustees of the Leiter Family Trust v. Morgan Stanley Smith Barney LLC f/k/a Citigroup Global Markets, Inc.)
The case revolved around the fact that there was a considerable concentration in American Express Company stock and the failure of Citigroup to protect the account through hedging strategies to reduce the risks or further diversification. In addition to the American Express stock the trust also held Lehman Brothers Holdings stock which caused losses of $2 million when the firm filed for bankruptcy in 2008.