We didn’t think Citigroup could fall any lower on the public opinion scale. The abrupt departure of CEO/punching bag Vikram Pandit was bad enough: Business Insider columnist Henry Blodget just came very close to labeling his subsequent “I resigned” claim as fraud.
But Citi’s fortunes keep getting worse: The bank recently settled a suit over releasing confidential information about Facebook’s financial status before the company’s IPO, and today brought news of a $2 million fine and the termination of a highly respected financial analyst.
Here’s what happened: Analyst Mark Mahaney, who is widely regarded as the financial industry’s number one expert on big-name tech companies like Google and Facebook, emailed a French journalist with his unpublished thoughts on the financial prospects of YouTube. This kind of move blatantly encourages insider trading. It went against his company’s official non-disclosure policy–and it also happens to be illegal.
The first mistake was bad enough, but then Mahaney tried to cover it up. A Citigroup PR rep, cc’ed on the earlier email, told Mahaney that he would need authorization before disclosing his assessment. But he’d already done it, and the lie quickly unraveled. Massachusetts regulators fined the company, and Mahaney got fired.
In a second incident, Mahaney’s assistant sent information about his work on the Facebook IPO to friends outside the company because the project was just too cool to keep under wraps. Again, this act was illegal. The assistant lost his job as well.
This case will probably only serve to confirm the public’s impression that Wall Street is full of very rich cheaters. Despite former CEO Sandy Weill’s change of heart, Citigroup remains “too big to fail”–but its public image won’t be improving anytime soon.
Note to PR pros in the financial industry: watch your colleagues. Even the best can go bad.
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