DOB: Citigroup Global Markets Inc., Settlement Agreement

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IN THE MATTER OF:

CITIGROUP GLOBAL
MARKETS INC.

  ("Citigroup Global")

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SETTLEMENT AGREEMENT        

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Part I of Chapter 668, Sections 36a-485 to 36a-534c, inclusive, of the Connecticut General Statutes, “Mortgage Lenders, Correspondent Lenders, Brokers and Loan Originators”, and Sections 9 and 19 to 21, inclusive, of Public Act 09-209;
 
WHEREAS, Citigroup Global is a New York corporation with an office at 399 Park Avenue, New York, New York;
 
WHEREAS, in response to Citigroup Global’s self-reporting to the Commissioner, the Commissioner, through the Consumer Credit Division of the Department of Banking, conducted an investigation pursuant to Section 36a-17 of the Connecticut General Statutes into the activities of Citigroup Global to determine if it had violated, was violating or was about to violate the provisions of the Connecticut General Statutes within the jurisdiction of the Commissioner;
 
WHEREAS, during the course of such investigation, Citigroup Global reported that during the period of October 2004 through May 2009, it made mortgage referrals to affiliated companies and it may technically have acted as a mortgage broker without obtaining the required licensure for its main office and eleven (11) branch offices where such business was conducted, in violation of Section 36a-486(a) of the Connecticut General Statutes, and employed or retained one hundred and ninety-five (195) individuals as originators or mortgage loan originators without registering or licensing them, in violation of Sections 36a-486(b) and 36a-511(b) of the then applicable Connecticut General Statutes;
 
WHEREAS, the Commissioner believes that such conduct would support initiation of enforcement proceedings against Citigroup Global, including proceedings to issue a cease and desist order against Citigroup Global pursuant to Section 36a-494(b) of the Connecticut General Statutes, as amended by Public Act 09-209, and Section 36a-52(a) of the Connecticut General Statutes, and impose a civil penalty of up to one hundred thousand dollars ($100,000) per violation on Citigroup Global pursuant to Section 36a-494(b) of the Connecticut General Statutes, as amended, and Section 36a-50(a) of the Connecticut General Statutes;
 
WHEREAS, Section 4-177(c) of the Connecticut General Statutes and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by agreed settlement, unless precluded by law;
 
WHEREAS, both the Commissioner and Citigroup Global acknowledge the possible consequences of formal administrative proceedings;
 
WHEREAS, Citigroup Global agrees to voluntarily enter into this Settlement Agreement without admitting or denying that the conduct set forth herein was in violation of the then applicable Connecticut General Statutes, and solely for the purposes of obviating the need for formal administrative proceedings concerning the conduct described above;
 
WHEREAS, Citigroup Global herein represents to the Commissioner that it has reviewed and updated its internal policies, procedures and controls for assessing whether it or any individual engaged in mortgage-related activity with Citigroup Global requires licensure from the Commissioner under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes;
 
WHEREAS, in connection with this settlement, Citigroup Global was provided the option to pay a civil penalty in the amount of Seventy-Five Thousand Dollars ($75,000) in settlement of this matter; 
 
WHEREAS, the State of Connecticut is a participant in the Nationwide Mortgage Licensing System and Registry (“NMLS&R”), jointly developed by the Conference of State Bank Supervisors (“CSBS”) and the American Association of Residential Mortgage Regulators to establish a unified and modern system of mortgage licensing and registration, and is committed to the success of NMLS&R;
 
WHEREAS, in connection with this settlement, Citigroup Global was provided an alternative option to make a voluntary contribution in the amount of Seventy-Five Thousand Dollars ($75,000) to the State Regulatory Registry LLC (“SRR”), a wholly-owned subsidiary of the CSBS, to support the NMLS&R;
 
WHEREAS, Citigroup Global elected to make a voluntary contribution to SRR in lieu of a civil penalty;
 
AND WHEREAS, Citigroup Global, through its execution of this Settlement Agreement, voluntarily agrees to waive any rights to a hearing upon the conduct described in this Settlement Agreement, and waives the right to seek judicial review or otherwise challenge or contest the validity of this Settlement Agreement.
 
NOW THEREFORE, the Commissioner and Citigroup Global enter into this Settlement Agreement as follows:

1. No later than the date this Settlement Agreement is executed by Citigroup Global, Citigroup Global shall make a voluntary contribution by cashier’s check, certified check or money order in the amount of Seventy-Five Thousand Dollars ($75,000) to SRR to support NMLS&R;
2. Upon entry of this Settlement Agreement, this matter will be resolved and the Commissioner will not take any future enforcement action against Citigroup Global based upon the conduct described herein; provided that entry of this Settlement Agreement is without prejudice to the right of the Commissioner to take enforcement action against Citigroup Global based on the conduct described herein if any representations made by Citigroup Global in this Settlement Agreement are subsequently discovered to be untrue or if Citigroup Global is not fully complying with any term or condition stated herein;
3. Nothing in the entry of this Settlement Agreement shall adversely affect the ability of Citigroup Global to apply for or obtain licenses or renewal licenses under Part I of Chapter 668, Sections 36a-485 et seq., of the Connecticut General Statutes, and to apply for or obtain licensure of its mortgage loan originators from the Commissioner;
4. Notwithstanding paragraph 2 herein, execution of this Settlement Agreement is without prejudice to the right of the Commissioner to take enforcement action against Citigroup Global to enforce this Settlement Agreement if the Commissioner determines that Citigroup Global is not fully complying with any term or condition stated herein.  For purposes of this paragraph, a violation of this Settlement Agreement shall be deemed to be a violation of an order of the Commissioner.

IN WITNESS WHEREOF, the parties hereto have caused this Settlement Agreement to be executed by each of them or their duly authorized representatives on the dates hereinafter subscribed.


Dated at Hartford, Connecticut
this 20th day of November 2009.         ________/s/_________
                                                     Howard F. Pitkin
                                                     Banking Commissioner



I, Karl L. Marquardt, state on behalf of Citigroup Global Markets Inc., that I have read the foregoing Settlement Agreement; that I know and fully understand its contents; that I am authorized to execute this Settlement Agreement on behalf of Citigroup Global Markets Inc.; that Citigroup Global Markets Inc. agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Citigroup Global Markets Inc. voluntarily agrees to enter into this Settlement Agreement, expressly waiving any right to a hearing on the matters described herein.                                       

                                            By:  ________/s/_________
                                                   Name:  Karl L. Marquardt
                                                   Title:  Counsel for
                                                   Northeast Mortgage Corporation


State of:  New York

County of:  New York


On this the 19 day of November 2009, before me, Rodd Corner, the undersigned officer, personally appeared Karl Marquardt who acknowledged himself to be the Counsel of Citigroup Global Markets Inc., a corporation that he, as such represents, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as attorney.

In witness whereof I hereunto set my hand.


                                         ________/s/_________
                                         Notary Public
                                         Date Commission Expires:  June 18, 2011


Administrative Orders and Settlements