SEC may probe Citigroup closed-end funds

By John Spence
MarketWatch
September 22, 2005

BOSTON -- Citigroup Inc. said the Securities and Exchange Commission staff is considering recommending administrative proceedings against two of its asset-management units that manage closed-end funds.

"The notification is a result of an industry-wide inspection by the Commission and is based upon alleged deficiencies in disclosures regarding dividends and distributions paid to shareholders of certain funds," Citigroup said in a statement Wednesday.

The SEC may seek a cease-and-desist order and/or monetary damages from Smith Barney Fund Management and Salomon Brothers Asset Management, Citigroup said.

The so-called Wells Notices, which came on Sept. 16, will not affect the sale of Citigroup's asset-management business to Legg Mason Inc., which is expected to close in the fourth quarter, Citigroup said.

"We have been cooperating with the SEC's industry-wide inquiry and believe the funds are currently in compliance with the regulations relevant to this matter," said Mary Athridge, a spokeswoman for Citigroup.

Five closed-end funds have received Wells Notices, she said Thursday.