FINRA Fines Firm for Best Execution and Supervisory Violations in Nonconvertible Preferred Securities Transactions

FINRA announced that it fined Citigroup Global Markets Inc. and ordered restitution for failing to provide best execution in customer transactions involving nonconvertible preferred securities, and for related supervisory deficiencies.

According to FINRA, one of the firm's trading desks employed a manual pricing methodology for nonconvertible preferred securities that did not incorporate the National Best Bid and Offer ("NBBO") appropriately for those securities. As a result, the firm priced customer transactions at a rate that was inferior to the NBBO. Additionally, FINRA stated, the firm's proprietary order execution system used a faulty pricing logic that only incorporated the primary listing exchange's quotation for each nonconvertible preferred security.

See: FINRA Action; FINRA Press Release.