Citigroup announces $285 million settlement in negligence suit
Citigroup Inc. yesterday agreed to settle negligence charges from 2006 and 2007 for $285 million based on charges brought by the Securities and Exchange Commission (SEC).
October 20, 2011 at 11:46 AM
6 minute read
The original version of this story was published on Law.com
Citigroup Inc. yesterday agreed to settle negligence charges from 2006 and 2007 for $285 million based on charges brought by the Securities and Exchange Commission (SEC). The bank's primary broker-dealer subsidiary, Citigroup Global Markets Inc., allegedly mislead its investors about a $1 billion collateralized debt obligation (CDO).
The SEC's director of the Division of Enforcement, Robert Khuzami, said in a statement that the investors deserved better treatment than Citigroup afforded them.
The investors, Khuzami said, “were not informed that Citigroup had decided to bet against them and had helped choose the assets that would determine who won or lost.”
Pending court approval of the settlement, Citibank will allocate the $285million among those investors who lost money. The bank refused to admit or deny the SEC's negligence claims, and explained in a statement that the SEC did not charge CGMI or any individuals with any intentional or reckless misconduct in connection with Citigroup's CDO business activities.
The SEC, however, singled out Brian H. Stoker, a leader in Citi's CDO restructuring group, who has since been released by the company. Fraser Hunter, Stoker's attorney and a partner at Wilmer Hale, denies the charge.
Hunter told the Washington Post that the SEC lacks a strong connection between his client and the bank's selection of assets.
The SEC's director of the Division of Enforcement, Robert Khuzami, said in a statement that the investors deserved better treatment than
The investors, Khuzami said, “were not informed that
Pending court approval of the settlement, Citibank will allocate the $285million among those investors who lost money. The bank refused to admit or deny the SEC's negligence claims, and explained in a statement that the SEC did not charge CGMI or any individuals with any intentional or reckless misconduct in connection with
The SEC, however, singled out Brian H. Stoker, a leader in Citi's CDO restructuring group, who has since been released by the company. Fraser Hunter, Stoker's attorney and a partner at
Hunter told the
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