WASHINGTON (AFP) - The world's largest financial services group, Citigroup Inc., has told investors the US Securities and Exchange Commission might bring civil charges against a former senior executive who Citigroup dismissed earlier this week.
Citigroup said it had been informed by the SEC that it might bring an enforcement action against Thomas Jones, 55, the former chief executive officer of Citigroup Global Investment Management, as well as "an employee and a former employee."
The financial giant said possible charges related to "the creation and operation of an internal transfer agent unit to serve primarily the (Citigroup run) Smith Barney family of funds."
Citigroup made the admission in a filing with the SEC, which provided no further details on the matter or the names of the other individuals involved.
The company said last November that regulators were probing the creation of the "internal transfer agent unit," and that prosecutors were looking at irregularities in its operation.
At the time, Citigroup said it was returning over 16 million dollars to the mutual funds run by its Citigroup Asset Management unit.
Citigroup declined to comment on the matter Friday, days after Jones, and two other senior executives were culled from its top ranks.
Thomas' departure from Citigroup was announced to senior managers late Tuesday in a memorandum issued by Citigroup chief executive officer Charles Prince.
Observers noted that Thomas' ousting came after Japanese regulators last month ordered Citigroup to shutter its private banking operations in the country for violating banking laws.
Citigroup watchers on Wall Street said Prince ousted Jones and the other executives in a bid to draw a line under the Japanese banking scandal.
In a high-level internal memo distributed to Citigroup's management committee Friday, obtained by AFP, Citigroup president and chief operating officer Robert Willumstad said Jones' departure was not related to the transfer agency investigation.
"We have been informed that, in connection with the transfer agency investigation we first disclosed in November 2003, our former colleague Tom Jones and two others have received a Wells Notice from the SEC.
"Neither the Wells Notice nor the underlying investigation had anything to do with Tom's leaving the company," Willumstad said.
A so-called Wells Notice is issued by the SEC to alert companies or individuals of the charges the regulator might bring against them and to give respondents an opportunity to respond.
10/22/2004 - 16:39 GMT - AFP