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Tue Jan 24, 2012, 09:47 PM

Citigroup sued for fraud over $1 billion of CDOs

Source: Reuters

Citigroup sued for fraud over $1 billion of CDOs

By Karen Freifeld

NEW YORK | Tue Jan 24, 2012 6:36pm EST

(Reuters) - Citigroup Inc (C.N) was sued for fraud by Loreley Financing over nearly $1 billion worth of collateralized debt obligations purchased in 2006 and 2007.

Citigroup is accused of defrauding Loreley into purchasing "fraudulent investments that are now worthless," Loreley said in a complaint filed Tuesday in New York State Supreme Court in Manhattan.

Citi used the CDOs to offload the risks of toxic mortgage-backed securities on its books and to help preferred clients "short" the housing market, the lawsuit claims.

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Read more: http://www.reuters.com/article/2012/01/24/us-citigroup-loreley-idUSTRE80N2JO20120124

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