Victor Menezes, the former head of emerging markets for Citigroup, received a Wells notice from the U.S. Securities and Exchange Commission related to his Citigroup stock trades, the NASD said in documents supplied to Reuters on Friday.

A Wells notice indicates the SEC intends to accuse the recipient of wrongdoing, and gives the recipient a chance to respond. The NASD, a self-regulatory body for the securities industry, said in a BrokerCheck report that the SEC issued the notice last August 10, and notified the NASD on September 9.

“The SEC staff has issued a Wells notice to [Menezes] regarding certain pre-approved trades made in connection with the exercise of options, about which all required public filings were timely made,” the NASD said in a section titled investigation.”

An SEC filing shows Menezes, who retired from Citigroup at the end of last year, sold 597,000 Citigroup shares on March 28 2002. He also exercised options to buy shares at the same time.

Fewer than three weeks later, on April 15, Citigroup disclosed that its Argentine unit, then overseen by Mr Menezes, had generated $2.2bn of losses because of that country’s default on its sovereign debt, amid a economic downturn.

Citigroup shares fell that day to a six-week low. Two months later, the bank stripped Mr Menezes of his day-to-day responsibilities for emerging markets. In April 2004, Mr Menezes, by then a senior vice chairman, decided to retire.

A Citigroup spokeswoman speaking on behalf of Mr Menezes said he exercised employee stock options to buy Citigroup shares on March 28. Although this exercise involved a stock sale, Mr Menezes at that time increased his ownership of Citigroup stock by 234,004 shares, the spokeswoman said.

Citigroup itself, declined to comment. The NASD report does not say who approved the trades.

Mr Menezes was at one time considered a possible successor to Sanford “Sandy” Weill as Citigroup chief executive.

The NASD was formerly known as the National Association of Securities Dealers.