UNITED STATES OF AMERICA

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 98940 / November 15, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-17808

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CITIGROUP GLOBAL MARKETS, :

INC.,

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Respondent.

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In the Matter of

ORDER APPROVING

PLAN OF DISTRIBUTION

ADMINISTRATIVE PROCEEDING

File No. 3-17809

In the Matter of

MORGAN STANLEY SMITH

BARNEY LLC,

Respondent.

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On January 24, 2017, the Commission issued separate, but related settled orders

(collectively, the “Orders”) against Citigroup Global Markets, Inc. (“CGMI”) 1 and Morgan

Stanley Smith Barney LLC (“MSSB”).2 The Commission found that, between August 2010 and

July 2011, CGMI, a registered broker-dealer and investment adviser, developed a foreign

exchange trading program known as CitiFX Alpha, and that registered representatives of CGMI

and MSSB (a registered broker-dealer and an investment adviser) presented CitiFX Alpha

program to certain brokerage customers and advisory clients of MSSB. The presentations of the

CitiFX Alpha program were rendered materially misleading because the marketing materials

failed to adequately disclose that the investors could be placed into the program using

substantially more leverage than was disclosed and that mark-ups would be charged on each

trade. The undisclosed leverage and mark-ups caused certain investors to suffer losses.

1

See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making

Findings, and Imposing a Cease-and-Desist Order, Securities Act Rel. No. 10288 (Jan. 24, 2017), (Admin. Proc. File

No. 3-17808).

2

See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making

Findings, and Imposing a Cease-and-Desist Order, Securities Act Rel. No. 10290 (Jan. 24, 2017), (Admin. Proc. File

No. 3-17809).

As a result of the conduct described in the Orders, the Commission found that CGMI and

MSSB violated Section 17(a)(2) of the Securities Act of 1933. The Commission ordered, among

other things, CGMI and MSSB to each pay a total of $2,963,735.61 in disgorgement,

prejudgment interest, and civil money penalty to the Commission. In each of the Orders, the

Commission created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002,

so the penalties paid, along with the disgorgement and interest paid, can be distributed to harmed

investors.

On January 31, 2023, the Commission issued an order consolidating the assets of the Fair

Funds created pursuant to the Orders into a single Fair Fund, the Morgan Stanley Smith Barney

Fair Fund (the “Fair Fund”), for purposes of distribution to harmed investors.3

The Fair Fund includes the $5,927,471.22 paid by the Respondents. The assets of the

Fair Fund are subject to the continuing jurisdiction and control of the Commission. The Fair

Fund and has been deposited in a Commission-designated account at the U.S. Department of the

Treasury, and any interest accrued will be added to the Fair Fund.

On September 14, 2023, the Division of Enforcement, pursuant to delegated authority,

published a Notice of Proposed Plan of Distribution and Opportunity for Comment (“Notice”),4

pursuant to Rule 1103 of the Commission’s Rules on Fair Fund and Disgorgement Plans

(“Commission’s Rules”);5 and simultaneously posted the Proposed Plan of Distribution (the

“Proposed Plan”). The Notice advised interested persons that they could obtain a copy of the

Proposed Plan from the Commission’s public website or by submitting a written request to

Jennifer Cardello, United States Securities and Exchange Commission, email at

cardelloj@sec.gov. The Notice also advised that all persons desiring to comment on the

Proposed Plan could submit their comments, in writing, within 30 days of the Notice. The

Commission received no comments on the Proposed Plan during the comment period.

The Proposed Plan provides for the distribution of the Net Available Fair Fund6 to certain

investors who suffered a loss in the form of excessive fees paid as a result of investing in CitiFX

Alpha, a foreign exchange trading program developed by CGMI and sold by one of three MSSB

financial advisors between August 2010 and July 2011 as described in the Orders.

The Division of Enforcement now requests that the Commission approve the Proposed

Plan.

3

See Order Consolidating Fair Funds, Exchange Act Rel. No. 96777 (Jan. 31, 2023).

Exchange Act Rel. No. 98399 (Sept. 14, 2023).

5

17 C.F.R. § 201.1103.

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All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Proposed

Plan.

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2

Accordingly, it is hereby ORDERED, pursuant to Rule 1104 of the Commission’s Rules,7

that the Proposed Plan is approved, and the approved Plan of Distribution shall be posted

simultaneously with this order on the Commission’s website at www.sec.gov.

For the Commission, by the Division of Enforcement, pursuant to delegated authority.8

Vanessa A. Countryman

Secretary

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17 C.F.R. § 201.1104.

17 C.F.R. § 200.30-4(a)(21)(iv).

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