SEC Settles Blue Sheet Charges With Citigroup

Banking, finance, and taxes

Published: July 12, 2016 12:15 pm

Last Updated: January 13, 2020 5:49 am

The U.S. Securities and Exchange Commission (SEC) recently announced that Citigroup Global Markets has agreed to pay a $7 million penalty and admit wrongdoing to settle charges that a computer coding error caused the firm to provide the agency with incomplete “blue sheet” information about trades it executed.

According to the report, the coding error occurred in the software that Citigroup used from May 1999 to April 2014 to process SEC requests for blue sheet data, including the time of trades, types of trades, volume traded, prices and customer identifying information.

During that 15-year period, Citigroup consequently omitted 26,810 securities transactions from its responses to over 2,300 blue sheet requests. After discovering the coding error, Citigroup failed to report the incident to the SEC or take any steps to produce the omitted data until nine months later.

Robert A. Cohen, co-chief of the SEC Enforcement Division’s Market Abuse Unit, commented:

Broker-dealers have a core responsibility to promptly provide the SEC with accurate and complete trading data for us to analyze during enforcement investigations. Citigroup did not live up to that responsibility for an inexcusably long period of time, and it must pay the largest penalty to date for blue sheet violations.

Other recent SEC cases involving failures to provide complete blue sheet data include:

Credit Suisse Securities (USA) LLC paid a $4.25 million penalty in September 2015, admitting that technological and human errors resulted in the omission of more than 553,400 reportable trades from blue sheet responses to the SEC for more than two years.

OZ Management LP paid a $4.25 million penalty in July 2015, admitting that it provided inaccurate trade data to four of its prime brokers and caused blue sheet violations for nearly six years.

Scottrade paid a $2.5 million penalty in January 2014, admitting that a computer coding error resulted in the omission of trades from blue sheet responses to the SEC for more than six years.