Business Litigation – Tax- Trading Plans – Citigroup Pays $600,000

Citigroup is solely responsible to disburse a $600,000 fine due to the company refusing to properly oversee stock – trading strategies that could have potentially reduced the bank’s tax bill. The Financial Industry Regulatory Authority (FINRA), who is Citigroup’s self – policing institution, brought forth the complaint, which resulted in the fine. The Industry claims that the brokerage company failed to manage and control trading and refused to avoid unacceptable internal trades with foreign companies as well as business partners. Tax – trading plans became a concern especially in New York after the discovery of Citigroup purchasing stock from foreign brokerage clients. FINRA then stepped in and requested that when time permits the taxable dividends on the stock to be paid out, that the stock be sold back to the clients. Dividends may be subject to the U.S. withholding taxes in the case of a U.S. company’s shares being compensated to foreign companies and investors. In this case, it was decided that the foreign customers were granted a “dividend equivalent” in an exchange but were not considered to be subject to withholding taxes.

– Source: Denver Post

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