A FINRA arbitration panel has ordered Citigroup to pay US$10.75 million to a former customer over investments losses in Royal Bank of Scotland Group, which was bailed out after the 2008 financial crash.
The FINRA arbitration panel has also ordered Edward Mulcahy, a former Citigroup broker, to pay compensatory damages of US$250,000 to the investor, John Leopoldo Fiorilla, according to a 30 July 2013 ruling.
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The investor claimed that the firm’s branch manager failed to supervise his financial advisor, allowing overconcentration damages to persist.
The findings reported Mulcahy was liable failing to implement an adequate risk management strategy regarding over concentrated positions of RBS stock in several investment accounts.
According to the ruling, Fiorilla filed the case in 2010, seeking US$19.5 million in damages and alleged that Citigroup was grossly negligent and failed to supervise its broker.
A Citigroup spokeswoman said: "We are disappointed with the award, which was not supported by the facts."
Mulcahy, who is currently registered with Morgan Stanley, has left Citigroup in 2009.
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