Securities-trading firms can get into hot water if they mismanage their Ops data.
While data governance and data quality management concerns are definitely not sexy subjects, securities-trading firms can get into hot water if data-related matters are mismanaged.
Take, for example, Citibank, N.A, and the $75 million penalty levied against it by the Office of the Comptroller of the Currency (OCC) and the related civil penalty of $60,625,620 from the Federal Reserve Board — both enforcement actions took place this past July.
The OCC’s action amended its Oct. 7, 2020, Cease and Desist Order against Citi (which included a $400 million penalty).
Grygo is the chief content officer for FTF & FTF News.
The heart of the matter focused on the OCC’s charges that the global bank had “deficiencies in enterprise-wide risk management, compliance risk management, data governance, and internal controls” via the 2020 order. Data governance is only one part of the OCC’s set of charges.
In particular, OCC officials alleged that the bank failed “to meet remediation milestones and make sufficient and sustainable progress towards compliance with the 2020 Order.”
The additional charges do not replace the 2020 Order, “which remains in full force and effect,” OCC officials point out.
“Citibank must see through its transformation and fully address in a timely manner its longstanding deficiencies,” according to Michael J. Hsu, acting comptroller of the currency in a prepared statement.
“While the bank’s board and management have made meaningful progress overall, including taking necessary steps to simplify the bank, certain persistent weaknesses remain, in particular with regard to data. Today’s amendment requires the bank to refocus its efforts on taking necessary corrective actions and ensuring appropriate resources are allocated for this purpose,” Hsu adds.
In July, Jane Fraser, CEO of Citi, quickly issued a statement acknowledging the problem.
“We have acknowledged that, despite making good progress in simplifying our firm and addressing our consent orders, there are areas where we have not made progress quickly enough, such as in our data quality management,” Fraser says.
Jane Fraser
“We’ve intensified our focus and increased our investment in those areas over the last several months. We will get these areas where they need to be, as we have done in other areas of the transformation. As we’ve said from the beginning of this multi-year effort, we’re committed to spending what is necessary to address our consent orders, as our agreement with the OCC demonstrates,” Fraser says. “We’ve always said that progress wouldn’t be linear, and we have no doubt that we will be successful in getting our firm where it needs to be in terms of our transformation.”
Officials at Citi have declined to comment any further beyond Fraser’s prepared statement.
The regulators’ actions make clear why data governance issues matter, and why avoiding this pitfall should be a major priority for every firm.
As a way to help firms better understand this matter, FTF is exploring this issue further as it relates to performance measurement and client reporting teams at its Performance Measurement & Client Reporting (PMCR) conference taking place in NYC, Feb. 27-28, 2025.
More information about the FTF event can be found here: https://shorturl.at/HDLU4
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