On January 24, 2017, the Commission instituted and simultaneously settled two related cease-and-desist proceedings (the “Orders”) against Morgan Stanley Smith Barney LLC (“MSSB”) and Citigroup Global Markets, Inc. (“CGMI”) (collectively, the “Respondents”). See the Commission’s Orders: Release Nos. 33-10288 and 33-10290. In the Orders, the Commission found that, between August 2010 and July 2011, CGMI, a registered broker-dealer and investment adviser, developed a foreign exchange trading program that registered representatives of CGMI and MSSB marketed to customers and clients of MSSB. The Respondents violated federal securities laws by making false and misleading statements about the foreign exchange trading program it sold to investors. The Commission ordered CGMI and MSSB to each pay a total of $2,963,735.61 in disgorgement, prejudgment interest, and civil money penalty. Each Order also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so that the penalty collected, along with the disgorgement and prejudgment interest, collected can be distributed to those harmed by the Respondents’ misconduct.

The Respondents have paid, as ordered, a total of $5,927,471.22 into the Fair Funds for distribution to harmed investors.

On September 14, 2017, the Commission issued orders appointing Miller Kaplan Arase LLP as the Tax Administrator to fulfill the tax obligations of the Fair Funds.

On January 31, 2023, the Commission issued an Order consolidating the Fair Funds into a single Fair Fund, the Morgan Stanley Smith Barney Fair Fund, for purposes of distribution to harmed investors. See the Commission’s Order: Release No. 34-96777.

On September 14, 2023, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-98399 and the Proposed Plan.

The Proposed Plan provides that the distribution of the Fair Fund shall be made to certain investors who suffered a loss in the form of excessive fees paid as a result of investing in CitiFX Alpha, a foreign exchange trading program developed by CGMI and sold by one of three MSSB financial advisors between August 2010 and July 2011, as described in the Orders, in accordance with the methodology detailed in the Proposed Plan.

On November 15, 2023, the Commission issued an order approving the Proposed Plan and simultaneously published the approved Plan of Distribution (the “Plan”). See the Commission’s Order: Release No. 34-98940 and the Plan.

For more information, please contact the Fund Administrator:

Jennifer Cardello
Telephone Number: (617) 573-4577
Email: cardelloj@sec.gov