UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 96777 / January 31, 2023

ADMINISTRATIVE PROCEEDING 

File No. 3-17808

In the Matter of

CITIGROUP GLOBAL MARKETS, 

INC.,

Respondent.

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ORDER CONSOLIDATING FAIR 

FUNDS

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”)1and 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 

 

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) (the “Citigroup Order”).

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) (the “Morgan Stanley Order”).
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CGMI and MSSB (a wholly owned indirect subsidiary at the time of CGMI) marketed the 

CitiFX Alpha program to certain brokerage customers and advisory clients of MSSB. The 

marketing 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 the investors to suffer 

losses.

As a result of the conduct described in the Citigroup and Morgan Stanley Orders, the 

Commission found, in their respective Orders, 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 prejudgment interest paid, can be distributed to harmed 

investors.

CGMI and MSSB have paid a total of $5,927,471.22 in disgorgement, prejudgment 

interest, and civil money penalties, as ordered, into their respective Fair Funds. The Fair 

Funds are currently on deposit in interest-bearing accounts at the United States Department of 

Treasury. Any interest accrued will be added to the Fair Funds for the benefit of the investors 

harmed by the conduct described in the Orders.

The Division of Enforcement recommends that the Fair Funds created pursuant to the 

Orders be consolidated into a single Fair Fund (the “Morgan Stanley Smith Barney Fair 

Fund”) for purposes of distribution to harmed investors.
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Accordingly, IT IS HEREBY ORDERED that the Fair Funds created pursuant to the 

Orders are consolidated into a single Fair Fund, the Morgan Stanley Smith Barney Fair Fund,

for purposes of distribution to harmed investors.

By the Commission.

Vanessa A. Countryman

Secretary