New York’s Attorney General, Eric T. Schneiderman, has reached an agreement with Citigroup Global Markets, Inc. (CGMI) in regard to overcharge fees assessed to CGMI investment accounts.

During what New York’s Office of the Attorney General (OAG) described as “an internal review conducted in cooperation with the Attorney General’s investigation of CGMI fees“, it was determined CGMI had overcharged fees to dormant investment accounts, and had either failed to reimburse the accounts after the discovery of the overcharges, or in some instances, failed to reimburse the accounts following a direct customer request for reimbursement.

Under the terms of the agreement, 15,000 CGMI customers will receive reimbursements of approximately $4.5 million dollars.

A 2012 investigation of CGMI led to the discovery that CGMI had overcharged 31,401 TRAK accounts above pre-negotiated fees between CGMI and its clients.

The 2012 investigation between the OAG and CGMI led to the reimbursement of $13,466,277.86 in principal and $3,312,021.41 in interest to CGMI clients who had been assessed fee overcharges.

Under the terms of the agreement, the OAG found that the overcharge of fees by CGMI “violated the Martin Act and Executive Law § 63(12)”. In addition to the approximately $20 million dollars in customer reimbursements and interest payments, CGMI agreed to submit quarterly written reports to the OAG for a period of three-years, and agreed to reimburse the State of New York $1 million dollars as monetary penalty.

The Martin Act, codified in New York General Business Law article 23-A, sections 352–353, provides New York’s AG the investigatory and subpoena power, and empowers the AG to “bring an action in the name and on behalf of the people of the State of New York” against the entity, if fraudulent practices are determined to have occurred.

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Further Reading and Research: 

“A.G. Schneiderman Announces Return Of Additional $4.5 Million To 15,000 Citi Customers For Fee Overcharges | Www.Ag.Ny.Gov”. 2017. Ag.Ny.Gov. Accessed January 13 2017. https://ag.ny.gov/press-release/ag-schneiderman-announces-return-additional-45-million-15000-citi-customers-fee.

Assurance of Discontinuance, No. 16-178, Investigation by ERIC T. SCHNEIDERMAN, Attorney General of the State of New York, of CITIGROUP GLOBAL MARKETS, INC., January 5, 2017 https://ag.ny.gov/sites/default/files/2017.01.12_cgmi_fully_executed_aod.pdf

“2015 New York Laws :: GBS – General Business :: Article 23-A – (General Business) FRAUDULENT PRACTICES IN RESPECT TO STOCKS, BONDS AND OTHER SECURITIES :: 352 – Investigation By Attorney-General.”. 2017. Justia Law. Accessed January 13 2017. http://law.justia.com/codes/new-york/2015/gbs/article-23-a/352/.

 

Editors, writers and members of the Fraternal Order of the Leather Apron Club.