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Wednesday, March 21, 2007

Ex Citigroup Analyst Fined For Miconduct

The Financial Services Authority (FSA) have fined, Roberto Casoni, a former Citigroup analyst £52K for market misconduct.

The FSA said that Casoni had released details of his research into Banca Italease, an Italian leasing and factoring bank, to several clients in January 2006 before formal publication.

Casoni was head of Citigroup's mid-cap team, when he disclosed details of his valuation methodology, final recommendation and target price for Banca Italease.

According to the FSA, Casoni emailed one fund manager who held a large position in Banca Italease stock on January 12 saying "Itaplease a bomb", and later offered to share his valuation methodology.

On January 13 he told a second fund manager that "Banca Italease is still a strong buy. I initiate tomorrow with a +50 pc upside". He also emailed a draft spreadsheet of his valuation model to another fund manager on that day. On January 16 he emailed another draft spreadsheet of his methodology to a fourth fund manager, which contained a valuation for Banca Italease.

Casoni's work was not officially published until January 23.

The FSA said:

"The FSA considers that it is improper market conduct for an analyst to selectively disseminate valuations (including drafts), recommendations or target prices to clients ahead of publication of that research.

It is also improper market conduct for an analyst to forward his working model to clients when there is an impending initiation of coverage. This is particularly so when the client is sophisticated and therefore may be in a position to derive benefit from the model
."

The FSA noted that Casoni had not had any intention of manipulating the Banca Italease share price, and had not personally profited from his actions. He received a 30% reduction in his fine for co-operating fully, and for settling the case at an early stage.

Rob McIvor, Citigroup spokesman, said that Casoni had left Citigroup in February 2006, shortly after Citigroup contacted the FSA about the matter. Mr McIvor pointed out that Citigroup's procedures on this issue, which Casoni had breached, were in line with the FSA's code of business requirements.

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