Citigroup Global Markets will pay a $15 million penalty to settle charges brought by the Securities and Exchange Commission (SEC) that it failed to enforce policies and procedures to prevent and detect securities transactions that could involve the misuse of material, nonpublic information.

The firm also failed to adopt and implement policies and procedures to prevent and detect principal transactions conducted by an affiliate.

Citigroup neither admitted nor denied the charges.

Citigroup was represented by Linda Chatman Thomsen at Davis Polk in Washington and Christian Mixter at Morgan Lewis in Washington.

Because broker-dealer employees routinely have access to material nonpublic information, the federal securities laws require every firm to take reasonable steps to prevent the misuse of that information.

An SEC investigation found that Citigroup did not review thousands of trades executed by several of its trading desks during a 10-year period.

Personnel used electronically generated reports to review trades on a daily basis, but technological errors caused the reports to omit several sources of information about thousands of relevant trades.

“Today’s high-speed markets require that broker-dealers and investment advisers manage the convergence of technology and compliance,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.  “Firms must ensure that they have devoted sufficient attention and resources to trade surveillance and other compliance systems.”

In addition to the $15 million penalty, Citigroup agreed to retain a consultant to review and recommend improvements to its trade surveillance and advisory account order handling and routing.

Without admitting or denying the findings, Citigroup consented to the SEC’s order that censures the firm and requires it to cease and desist from committing or causing these violations.