Japan's top financial regulator today ordered a local branch of Citibank to suspend business at one division for breaking the law to help clients hide losses.
The Financial Services Agency (FSA) said it had told the Japanese branch to suspend operations from August 10th to 16th at its alternative investment strategies division, partly because of improper securities transactions on behalf of clients.
The division had offered financial products to about 40 clients that helped them to hide losses, the FSA said.
Citibank, a unit of Citigroup, said the division involved had nine staff members, serving corporate and private institutional investors.
A spokesman for the Citibank branch said the branch had notified the regulator after its own internal investigation found the division had violated Japanese regulations. The notification was filed before an FSA inspection, he said.
"None of these violations were willful, although we regret their occurrence and any inconvenience they may have caused our customers," he said.
Citibank said it had taken measures to ensure the incidents will not happen again, including restructuring the division, introducing new management oversight and reviewing compliance policies and procedures.
Regulators in Japan are taking an increasingly tough line against irregular transactions involving domestic and foreign financial firms to bolster investor confidence and discipline in Tokyo's financial markets.