Morgan Stanley Smith Barney and Citigroup Global Markets will pay more than $2.96 million apiece to settle charges that they made false and misleading statements about a foreign exchange trading program they sold to investors.

According to the SEC’s orders, Citigroup held a 49 percent ownership interest in Morgan Stanley Smith Barney at the time, and registered representatives at both firms were pitching a foreign exchange trading program known as ”CitiFX Alpha” to Morgan Stanley customers from August 2010 to July 2011.

The SEC’s orders find that their written and verbal presentations were based on the program’s past performance and risk metrics, and they failed to adequately disclose that investors could be placed into the program using substantially more leverage than advertised and markups would be charged on each trade.  The undisclosed leverage and markups caused investors to suffer significant losses.

The SEC’s orders find that Morgan Stanley and Citigroup violated Section 17(a)(2) of the Securities Act of 1933, which prohibits obtaining money or property by means of  any material misstatement or omission in the offer or sale of securities.

Without admitting or denying the SEC’s findings, Morgan Stanley and Citigroup each agreed to pay disgorgement of $624,458.27 plus interest of $89,277.34 and a penalty of $2.25 million for a total of more than $5.9 million combined.