Updated from 10:17 a.m. EDT with statement from Citigroup.
NEW YORK (TheStreet) -- Citigroup's (C) research arm has been fined $30 million by Massachusetts' securities regulator over a former analyst's disclosure of nonpublic research to hedge funds including Steven Cohen's SAC Capital, prior to releasing the information to the public.
According to the order, Kevin Chang, a research analyst then employed by Citigroup Global Market's (CGMI) Taiwan office in December 2012 provided confidential research information about Hon Hai, a key supplier of Apple's (AAPL) iPhones, one day before publishing virtually identical information to the public.
Recipients of the undisclosed information included three units of SAC Capital, which has been the target of a massive insider trading probe. T.Rowe Price, Citadel and GLG Partners also received the information.
Chang published his Hon Hai research report on Dec. 14, 2012, with the updated forecast of Hon Hai's production numbers, a day after emailing the named hedge funds his revised forecasts .Two days after Chang published his report, Citigroup Global Markets downgraded Apple to neutral from buy.
The order stated that three CGMI clients executed sales of Apple stock between the receipt of the information and the publication of Chang's Hon Hai report, days before the Apple report was published.
"Because the December 16 Apple Research Report was published on a Sunday, customers would not act on the information contained therein until trading began on the following day, on Monday, December 17, 2012," the order stated.
"It seems that the concept that investors are to be presented with a level playing field when it comes to the product of research analysts is a lesson that must be learned over and over again," said Secretary of Commonwealth William Galvin, "but it's important that it should be taught as often as necessary."