Saturday, August 2, 2008

NY AG to Sue Citigroup over ARS?

It appears that the New York Attorney General is getting ready to go after Citigroup, not only for ARS violations, but for destruction of evidence.

We originally thought that the various headlines lines like "Citigroup subject of ARS investigations, too, filing shows - Financial Week were a bit over the top, since the substance behind the headline was that Citigroup disclosed in a 10-Q that it had received state and federal subpoenas. No big deal there, since receiving a subpoena does not mean that you are the subject of an investigation.

However, we then found the story at CNBC - Citigroup Faces Fraud Charges From New York AG which reports that "[t]he office of New York Attorney General Andrew Cuomo said Friday it plans to imminently charge Citigroup's Global Markets and Citi Smith Barney units with fraudulently marketing auction-rate securities and destroying documents that were supoenaed by the state. According to Cuomo's office, Citigroup has repeatedly and persistently committed fraud by making material misrepresentations and omissions in its underwriting and distribution of auction-rate securities by marketing them as very safe and liquid investments.

We tried to find a link to the AG's quote at his web site, but it was apparently down this morning.
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