Citigroup to pay $10.75 million in arbitration

Thu Aug 1, 2013 6:14pm EDT

A man walks past a Citibank branch in lower Manhattan, New York October 16, 2012. REUTERS/Carlo Allegri

A man walks past a Citibank branch in lower Manhattan, New York October 16, 2012.

Credit: Reuters/Carlo Allegri

(Reuters) - Citigroup Inc (C.N) was ordered to pay $10.75 million to a former customer over losses from investments in Royal Bank of Scotland Group PLC (RBS.L), which was bailed out after the 2008 financial crash, a securities arbitration panel ruled.

A Financial Industry Regulatory Authority arbitration panel also ordered Edward Mulcahy, a former Citigroup broker, to pay $250,000 to the investor, John Leopoldo Fiorilla, according to a July 30 ruling.

"We are disappointed with the award, which was not supported by the facts," a Citigroup spokeswoman said. A lawyer for Fiorilla was not immediately available for comment.

FINRA, Wall Street's industry-funded watchdog, runs an arbitration unit that hears disputes between investors and their brokerages.

Fiorilla filed the case in 2010, seeking $19.5 million in damages, according to the ruling. Citigroup, he alleged, was grossly negligent and failed to supervise its broker.

Mulcahy left the New York-based lender in 2009. He recently retired from Morgan Stanley. Efforts to locate him were not successful.

The ruling did not include the reasons for the decisions, as is typical in arbitration cases.

(Reporting by Neha Dimri in Bangalore and Suzanne Barlyn in New York; Editing by Phil Berlowitz)

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