One of the senior executives ousted from Citigroup this week over its regulatory problems in Japan is facing possible action by the US Securities and Exchange Commission (SEC) in relation to its mutual funds business.

The SEC has told Mr Thomas Jones, Citigroup's former head of investment management, it is considering recommending enforcement proceedings against him.

The possible action relates to the operation of an internal transfer agent unit that has been investigated by federal prosecutors, in addition to the SEC.

Last November, Citigroup said it had uncovered errors involving its entry into the transfer agent business, a back-office function that involves keeping records for mutual funds.

Citigroup said it had received a payment from a sub-contractor that should have been disclosed to the boards of its funds as part of their consideration of transfer agent arrangements.

The statement followed this week's ousting of Mr Jones along with Sir Deryck Maughan, chairman of Citigroup International, and Mr Peter Scaturro, head of Citigroup's private bank.

Mr Chuck Prince, chief executive, has made restoring Citigroup's business ethics a priority. - (Financial Times Service)