Citibank Agrees To Settle SEC 'Dark Pool' Claims For $12M

To settle allegations involving its premium “dark pool" called Citi Match, Citigroup will pay more than $12 million in "disgorgement and penalties." The news comes as the U.S. Securities and Exchange Commission (SEC) claims that two high-frequency traders routed millions through Citi Match, while the firm allegedly told clients that they were not using the service, Financial Times reported.

At the same time, the SEC claims that Citigroup didn’t say that nearly half of orders through Citi Match were “routed to and executed in other trading venues, including other dark pools and exchanges, that did not offer the same premium features as Citi Match.”

In a statement, Joseph G. Sansone, chief of the SEC enforcement division’s market abuse unit, said, “Market participants deserve to make informed decisions about where they execute their orders. All trading venues, regardless of their trade volume, must ensure that their users have accurate information, particularly about key issues like order routing.”

The news comes months after Citigroup disclosed in a filing with the Securities and Exchange Commission (SEC) in February that it uncovered “methodological issues” with how it calculates credit card interest rates and will offer “remediation” to those customers impacted by such calculations.

As noted by Reuters, and in an additional statement from Citigroup, the banking giant — which was the third-largest card lender in the United States as of 2016, according to The Nilson Report — disclosed the extent of the impact: 1.75 million accounts have been affected and $335 million is being refunded to consumers, it was reported at the time. The company disclosed it “self-reported” the findings to regulators, as pertains to Regulation Z and the CARD Act.

In other news gleaned from the filing, unreserved legal costs in their entirety have been estimated at $1 billion as of the end of 2017, down from the $1.5 billion that had been tallied at the end of the September quarter. Elsewhere in the filing, and as reported by Reuters, the company disclosed the accounting charge in the fourth quarter – stemming from last year’s changes in the tax law – stood at $22.6 billion, up from an earlier disclosure of $22 billion.



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