Boston, MA 10/13/2014 (wallstreetpr) – Citigroup Inc. (NYSE:C) has reached an agreement with the attorneys general office in New York for the payment of $16 million as compensation, for a number of investments accounts it had overcharged. The overcharging claims trace back to 2012 on a number of claims that had been raised in Westchester County.
31,000 Customers Overcharged
One of the claimants had complained that the bank had overcharged her by more than 0.3% over a period of 3-years, against an earlier agreed rate of 1.2% on her investment account. The result was that she ended up paying an extra $3,000 over the period. An investigation was launched, and the bank was found to have overcharged a number of accounts thus the $16 million penalty.
The penalty fee will reportedly cover for up to 31,000 customers who were affected by the Citigroup Inc. (NYSE:C)’s misguided actions. Accounts that mostly formed part of the investigations and which were mostly affected are known as TRAK accounts and are, usually, maintained by customers in need of low-risk investment products involving mutual funds.
Charges for obtaining services under the accounts, usually, range from 1% to 1.5%. Citigroup Inc. (NYSE:C) cooperated throughout the investigation period and has not shown any unwillingness to compensate any of the affected accounts.
Citigroup’s Q3 Earnings preview
Citigroup Inc. (NYSE:C) is set to post its third quarter earnings on Tuesday having recorded a 12% drop in revenue in the second quarter. Analysts remain confident that the bank will post earnings per share of $1.13 against $1.02 that was posted a year ago same quarter. Revenues should trickle in at $19.14 billion up from $17.88 billion that was posted a year ago.
Investors will wait in-anticipation to hear what the CFO will say about the banks’ capital plan having reiterated in September that expenses could eat a greater chunk of the company’s capital. Citigroup Inc. (NYSE:C)’s share price is nearly down by 3% on a year to date.
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