The SEC is looking into the way that Citigroup's asset management subsidiaries pay dividends and distributions to mutual fund shareholders, according to a SEC filing.

SEC staff are "considering recommending that the Commission institute administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the Investment Company Act (and related Rule 19a-1)," wrote Citigroup officials in the filing.

The proceedings would affect Citigroup units Smith Barney Fund Management and Salomon Brothers Asset Management.

Citigroup said that it was notified by the SEC on September 16. The investigation is part of a industry-wide investigation into "alleged deficiencies" in dividend and distribution procedures.

Citigroup said that the SEC's notification would not affect the pending asset management sale to Legg Mason.  

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