NEW YORK, Sept 22 A U.S. regulator ordered
Citigroup Inc (C.N), UBS AG UBSN.VX and Deutsche Bank AG
(DBKGn.DE) to pay up to $845,000 in fines and restitution
because of communications breakdowns related to the 2006
initial public offering of Vonage Holdings Corp (VG.N).
The Financial Industry Regulatory Authority said the banks,
which were lead underwriters for the IPO, failed to properly
supervise the outsourcing of communications with customers
about Vonage, an Internet-based calling company.
FINRA said when an outside company made an error that
caused some customers who received IPO shares to be told they
had not, the banks were unable to promptly fix the problem.
As a result, by the time customers learned several days
later that they had gotten shares, Vonage's share price had
fallen significantly. FINRA said the customers were nonetheless
required to pay the higher $17 per share IPO price, and
suffered losses when they later sold the shares.
Citigroup was fined $175,000 and ordered to pay up to
$250,000 in restitution to 284 potentially eligible customers.
UBS was fined $150,000 and ordered to pay up to $118,000 to 126
potential customers. Deutsche Bank was fined $100,000 and
ordered to pay up to $52,000 to 59 potential customers.
None of the banks admitted wrongdoing.
FINRA said it regulates nearly 4,800 brokerages.
Vonage shares closed Monday at $1.44.
(Reporting by Jonathan Stempel)