August 16, 2018 / 3:59 PM / 2 months ago

UPDATE 1-Citi settles U.S. SEC charges over bad controls, supervision

(Adds comment from Citi)

WASHINGTON, Aug 16 (Reuters) - Citigroup agreed to pay $10.5 million to settle two separate complaints, one relating to bad loans made by its Mexican subsidiary, Banamex, between 2008 and 2014, U.S. regulators said on Thursday.

The other concerned a trader mismarking illiquid positions and unauthorized proprietary trading by Citigroup Global Markets Inc (CGMI) from 2013 to 2016, the Securities and Exchange Commission said.

“Fraudulently-induced loans” made by Banamex to Oceanografia that led to $475 million in losses were the result of inadequate controls that prevented them from registering ‘numerous red flags’ in the borrower’s documents,” the SEC said in a statement.

The regulator also said inadequate supervision allowed CGMI traders to mismark illiquid positions and cover up $81 million in losses.

“We are pleased to have these matters resolved,” Danielle Romero-Apsilos, a spokeswoman for Citi Global said in an email.

Citigroup and CGMI settled the allegations without admitting or denying the SEC’s findings. (Reporting by Lisa Lambert in Washington and John McCrank in New York Editing by Chizu Nomiyama and Steve Orlofsky)

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