UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 98399 / September 14, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-17808

In the Matter of

CITIGROUP GLOBAL MARKETS, 

INC.,

Respondent.

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NOTICE OF PROPOSED PLAN OF 

DISTRIBUTION AND 

OPPORTUNITY FOR COMMENT

ADMINISTRATIVE PROCEEDING

File No. 3-17809

In the Matter of

MORGAN STANLEY SMITH 

BARNEY LLC,

Respondent.

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Notice is hereby given, pursuant to Rule 1103 of the United States Securities and 

Exchange Commission’s (the “Commission”) Rules on Fair Fund and Disgorgement Plans (the 

“Commission’s Rules”), 17 C.F.R. § 201.1103, that the Division of Enforcement has submitted 

to the Commission a proposed plan of distribution (the “Proposed Plan”) for the distribution of 

monies paid in the above-captioned matters.

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 

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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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. 

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 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 (referenced herein as 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.

OPPORTUNITY FOR COMMENT

Pursuant to this Notice, all interested persons are advised that they may obtain a copy of 

the Plan from the Commission’s public website at http://www.sec.gov/litigation/fairfundlist.htm. 

Interested persons may also obtain a written copy of the Proposed Plan by submitting a written 

request to Jennifer Cardello, United States Securities and Exchange Commission, via email at 

cardelloj@sec.gov. All persons who desire to comment on the Proposed Plan may submit their 

comments, in writing, no later than thirty (30) days from the date of this Notice:

1. to the Office of the Secretary, United States Securities and Exchange 

Commission, 100 F Street, NE, Washington, DC 20549-1090;

2. by using the Commission’s Internet comment form 

(http://www.sec.gov/litigation/admin.shtml); or

3. by sending an e-mail to rule-comments@sec.gov.

Comments submitted by email or via the Commission’s website should include “Administrative 

Proceeding File Nos. 3-17808 and 3-17809” in the subject line. Comments received will be 

3

 See Order Consolidating Fair Fund, Exchange Act Rel. No. 96777 (Jan. 31, 2023).
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publicly available. Persons should submit only information they wish to make publicly 

available.

THE PROPOSED PLAN

The Net Available Fair Fund4is comprised of the $5,927,471.22 in disgorgement, 

prejudgment interest, and civil money penalties paid by the Respondents, plus interest and 

income earned thereon, less taxes, fees, and expenses. The Proposed Plan provides for the 

distribution of the Net Available Fair Fund 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.

For the Commission, by the Division of Enforcement, pursuant to delegated authority.5

Vanessa A. Countryman

Secretary 

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

Plan.

5

 17 C.F.R. § 200.30-4(a)(21)(iii).