A Citigroup subsidiary has agreed to refund nearly $16 million to 31,234 customers who were said to have been charged higher investment advisory fees than promised.
The customers had so-called TRAK accounts set up with Citigroup Global Markets. These accountholders pay a fee that is typically between 1% and 1.5% for advisory services. But these fees are negotiable, and customers usually obtain a lower fee than the standard rate.
New York Attorney General Eric Schneiderman launched an investigation in 2012 after a customer complained the bank charged a 1.5% fee over a three-year period rather than the agreed-upon 1.2%. Overall, this customer was overcharged more than $3,000, Schneiderman said in a press release Thursday.
Furthermore, the attorney general's investigation found a "widespread problem" in which tens of thousands of Citigroup customers were unaware that they were paying more than they should, the release said.
Meanwhile, Citigroup is conducting an internal review to determine if other types of accounts have been overcharged. If so, the bank will pay these account holders restitution, the release said.
Schneiderman's investigation is still continuing, according to the release. His office will also oversee the Citigroup review and remediation efforts.
Citigroup did not immediately return a phone call seeking comment.