Citibank Settles With SEBI For Over ₹40 Lakh Following Investigation Into Alleged Regulatory Violations

Citibank N.A. has settled with the Securities and Exchange Board of India (SEBI) agreeing to pay over ₹40 lakh in connection with an investigation into alleged regulatory breaches. This settlement comes after SEBI investigates Citibank's failure to comply with several regulations, including those governing foreign investments, guidelines for depositories and participants and procedures for managing financial transactions. The issue came to light when SEBI, during an inspection, found that Citibank's implementation team allegedly regenerated Customer Acquisition Forms (CAF) and replicated clients' wet-ink signatures without their knowledge or consent. Such actions raised significant concerns regarding the integrity and transparency of Citibank's operations. The notice sought an explanation as to why proceedings should not be initiated for the alleged violations under various SEBI regulations, including the SEBI (Foreign Portfolio Investors) Regulations, 2019, and the SEBI (Depositories and Participants) Regulations, 2018. The first violation was related to Regulation 32(1) of the SEBI (Foreign Portfolio Investors) Regulations, 2019. This regulation governs the conduct and compliance requirements for entities handling foreign portfolio investments in India. Citibank was found to have breached these regulations in its procedures for managing client accounts and handling customer documentation. Another violation pertained to Clause 3 of the Code of Conduct outlined in the Third Schedule under Regulation 37 of the SEBI (Depositories and Participants) Regulations, 2018. This clause mandates that depository participants must maintain the highest standards of integrity, fairness, and professionalism in their operations. Additionally, Citibank violated specific operational guidelines those outlined in Para 2 of Part A and Para 8 of Part A of SEBI's Operational Guidelines. These guidelines are designed to ensure that depository participants follow proper procedures in their operations including maintaining accurate records and obtaining valid client authorizations. Citibank responded by filing a settlement application with SEBI and requested to resolve the matter without admitting or denying the findings. The bank proposed a settlement under the SEBI (Settlement Proceedings) Regulations, 2018 which allows entities to settle disputes by paying a monetary amount without admitting guilt. SEBI's Internal Committee reviewed Citibank's application and recommended a settlement amount of ₹40,20,000. This recommendation was based on the gravity of the violations and the need to ensure that such non-compliance does not recur. Click Here To Read/Download Order

Citibank Settles With SEBI For Over ₹40 Lakh Following Investigation Into Alleged Regulatory Violations

Rajesh Kumar

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