(Adds details of overcharges, Citi comment)
By Karen Freifeld
NEW YORK, Oct 9 (Reuters) - Citigroup Global Markets Inc (CGMI), a unit of Citigroup Inc, has agreed to return nearly $16 million to more than 31,000 customers who were overcharged for advisory fees, the New York Attorney General said on Thursday.
The customers held accounts that typically charge fees of 1 percent to 1.5 percent, New York Attorney General Eric Schneiderman said in a statement. Many customers negotiated lower rates, but the fees charged did not reflect those promised rates.
The office began an investigation in 2012 after a complaint from a customer in Westchester, New York, who had negotiated a 1.2 percent fee but was charged the standard 1.5 percent, costing her more than $3,000 over three years, Schneiderman said.
The attorney general began probing whether other customers with the same accounts, known as “TRAK” accounts, also had been overcharged. TRAK accounts essentially hold a managed basket of mutual funds.
Citi cooperated with the investigation and identified tens of thousands of TRAK customers who were overcharged, Schneiderman said.
“While we deeply regret any error and inconvenience to our clients, they will be reimbursed with interest,” a Citi spokesman said in an email.
Some customers have already started to receive their refunds, while thousands more may be unaware they are eligible for reimbursement, Schneiderman said.
The investigation will continue to determine if additional customers were overcharged. (Reporting by Karen Freifeld; Additional reporting by Narottam Medhora in Bangalore; Editing by Gopakumar Warrier and Lisa Shumaker)