Hong Kong regulators have fined Citigroup $770,000 for failing to promptly report a Ponzi scheme run by an employee under “the nose” of company officials.
The Securities and Futures Commission said a former licensed representative of the bank was responsible for a fraudulent scheme involving 13 clients.
The employee was fired, and the company says it will compensate people affected by the scheme.
A Ponzi scheme attracts victims with the illusion that they can make huge returns. The fraud is convincing for a while because the operator pays early investors with money from victims who join the scheme later.