FINRA penalizes Citigroup, UBS and Deutsche Bank

image Citigroup Inc, UBS AG and Deutsche Bank AG, lead underwriters for the IPO, have been ordered by The Financial Industry Regulatory Authority to pay up to $845,000 in fines and restitution as a result of communications breaches related to the 2006 initial public offering of Vonage Holdings Corp.

Thus, Citigroup was fined $175,000 and ordered to pay up to $250,000 in restitution to 284 potentially eligible customers. UBS was fined $150,000 and ordered to pay up to $118,000 to 126 potential customers. Deutsche Bank was fined $100,000 and ordered to pay up to $52,000 to 59 potential customers.

According to FINRA report, the banks were unable to promptly fix the problem appeared when an outside company made an error that caused some customers who received IPO shares to be told they had not.

So, by the time clients learned several days later that they had gotten shares, Vonage’s share price had dropped significantly. FINRA said the customers were nonetheless required to pay the higher $17 per share IPO price, and suffered losses when they later sold the shares.

FINRA said it regulates nearly 4,800 brokerages.


Comments are closed.