Citibank (NYSE: C) Slapped with $600,000 Fine from Financial Industry Regulatory Authority

Citibank (NYSE: C) has been assessed a $600,000 fine to settle claims from the Financial concerning supervision over certain derivative transactions that allowed some foreign clients to avoid paying taxes on dividends.

The Financial Industry Regulatory Authority (FINRA) stated that Citigroup failed its duty to supervise trades and swaps of derivatives between 2002 and 2005.

Susan Merril, FINRA’s chief enforcement officer, said “Citigroup’s inadequate supervision resulted in improper trading.” Merril continued, “Increasingly complex trading strategies must be governed by supervision that is equally sophisticated.”

The U.S. Senate weighed in on the issue by creating a new inquiry concerning Wall Street. Specifically, the inquiry alleged that some firms were involved in manipulating derivatives and stock-loans to give clients a means of avoiding hundreds of millions of dollars in taxes.

Citibank moved to provide the IRS with full disclosure concerning the allegations and paid $24 million for the years of 2003 to 2006, according to the Senate’s Permanent Subcommittee on Investigations. “We are pleased to have this matter resolved,” said Citibank spokeswoman Danielle Romero-Apsilos said in an e-mailed statement.

This development is part of an ongoing effort by the federal government’s attempt to crack down on tax evasion in hopes of lessening the increasing budget deficits that have come as a result of excessive spending and declining tax revenues.