Citi (C), UBS, Deutsche Bank (DB) Fined Over Vonage IPO
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The Financial Industry Regulatory Authority (FINRA) fined Citigroup (NYSE: C), UBS AG (NYSE: UBS) and Deutsche Bank AG (NYSE: DB) a total sum of $425,000 and ordered them to pay customers up to a total of $420,000 for their failure to properly supervise communications related to Vonage's (NYSE: VG) IPO. None of the firms admitted or denied the charges.
Finra found each failed to establish adequate procedures to supervise the outsourcing of communications with customers about the Vonage IPO in May 2006. The three firms were underwriters for the IPO, which included a directed-share program under which about 4.2 million shares were sold to Vonage customers through accounts they opened at the firms.
An outside company was hired to run a Web site for investors in the program because of the expected heavy demand. When a problem at the outside company caused numerous customers to receive wrong communications, the firms were unable to respond satisfactorily.
Some customers were told they hadn't received IPO shares although they were awarded shares because of the firms' failure to respond to the problem.
Citigroup was fined $175,000 and ordered to pay up to $250,000 to 284 possibly eligible customers; UBS was fined $150,000 and ordered to pay a maximum of $118,000 to 126 potentially eligible customers; and Deutsche Bank was fined $100,000 and ordered to pay a maximum of $52,000 to 59 potentially eligible customers.
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Finra found each failed to establish adequate procedures to supervise the outsourcing of communications with customers about the Vonage IPO in May 2006. The three firms were underwriters for the IPO, which included a directed-share program under which about 4.2 million shares were sold to Vonage customers through accounts they opened at the firms.
An outside company was hired to run a Web site for investors in the program because of the expected heavy demand. When a problem at the outside company caused numerous customers to receive wrong communications, the firms were unable to respond satisfactorily.
Some customers were told they hadn't received IPO shares although they were awarded shares because of the firms' failure to respond to the problem.
Citigroup was fined $175,000 and ordered to pay up to $250,000 to 284 possibly eligible customers; UBS was fined $150,000 and ordered to pay a maximum of $118,000 to 126 potentially eligible customers; and Deutsche Bank was fined $100,000 and ordered to pay a maximum of $52,000 to 59 potentially eligible customers.
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