A class action lawsuit accuses Citigroup Inc.'s Smith Barney of paying its brokers undisclosed commissions to push sales of the unit's mutual funds over other choices.
The suit, filed May 28 in the U.S. District Court for the Southern District of New York, also targets Citi's asset management division and six individuals who served as directors of the funds in question.
Smith Barney "offered brokers and regional and branch managers various cash and noncash incentives so that plaintiff and other class members would buy interests in the proprietary funds," said the complaint, filed by Milberg Weiss Bershad & Schulman LLP.
The incentives included gift certificates, dinners, tickets to professional basketball games, vacations, and allocations of initial public offerings, the suit said.
The payments were finally disclosed in prospectuses issued March 22, 2004, according to the lawsuit, which covers the period from 1999 until then.
A spokeswoman for Citigroup Asset Management said Friday, "The suit is without merit. We intend to defend our case vigorously."
