The NASD announced this week that it was imposing a fine of $5 million against Citigroup(NYSE: C) for its "materially misleading" research reports on now-defunct Winstar Communications, reports that were authored by former celebrity-analyst-for-life Jack Grubman. The NASD trumpeted the fact that this was the third-largest fine it had levied in its history.

Excuse us? Did you say $5 million? Wow, NASD, we're pretty sure Citigroup will be able to come up with that much money by checking the seat cushions in the boardroom. Way to put your foot down. This doesn't even come close to negating the $20 million-plus that Citigroup subsidiary Salomon Smith Barney garnered in investment-banking deals from Winstar, much less the trades the company's brokers foisted upon clients as a result of this tarnished research.

What kind of deterrent is it for companies from breaking the rules if you fine them less than a quarter of the money their illicit activities generated in the first place?

We're somewhat mollified by the fact that this fine does not address other analyst and investment-banking issues under investigation by the NASD, the New York attorney general, and various regulators. In fact, this morning, Citigroup is reportedly close to agreeing to a separation of research from investment banking, along with paying another fine of some sort. This deal would then be taken to all of the various authorities. If there is a fine, this time may we suggest it come in a form that would at least make 'em hurt?