Accused of Deception, Citi Agrees to Pay $285 Million

[IDemo]

Source: New York Times

By EDWARD WYATT
Published: October 19, 2011

WASHINGTON — Citigroup agreed to pay $285 million to settle charges that it misled investors in a $1 billion derivatives deal tied to the United States housing market, then bet against investors as the housing market began to show signs of distress, the Securities and Exchange Commission said Wednesday.

The S.E.C. also brought charges against a Citigroup employee who was responsible for structuring the transaction, and brought and settled charges against the asset management unit of Credit Suisse and a Credit Suisse employee who also had responsibility for the derivative security.

The S.E.C. said that the $285 million would be returned to investors in the deal, a collateralized debt obligation known as Class V Funding III. The commission said that Citigroup exercised significant influence over the selection of $500 million of assets in the deal’s portfolio.

Citigroup then took a short position against those mortgage-related assets, an investment in which Citigroup would profit if the assets declined in value. The company did not disclose to the investors to whom it sold the collateralized debt obligation that it had helped to select the assets or that it was betting against them.


Read more: http://www.nytimes.com/2011/10/20/business/citigroup-to-pay-285-million-to-settle-sec-charges.html

[Hell Hath No Fury]

1. "...settled charges ..."

Sorry, not good enough, not by a long shot.

[truthisfreedom]

2. A little tiny prize for the OWSers.

I wonder if more sacrifices will be made to placate the masses.

[valerief]

3. So that's it? Thanks for nothing, SEC.nt

[Javaman]

10. Exactly, they make about that much in a day. nt

[RUMMYisFROSTED]

4. So they pay back 30% of their crime?

:freak:


I gotta get in on that scam!

[msongs]

5. steal a twinkie go to hjail - steal billions get a fine that is probably a tax write off nt

[Atypical Liberal]

6. Exactly. n/t

[Stuart G]

7. Put the the person who decided to do this...in jail....nt.

[chill_wind]

8. k & r

Mr. Stoker, who left Citigroup in 2008, is fighting the S.E.C. case, his lawyer said. Mr. Bhatt settled, agreeing to a six-month suspension from association with any investment adviser.

Ooooh. 6 months suspension. Tough penalty.

[No Elephants]

9. Whoever said "Crime does not pay" had to be kidding.

[sarcasmo]

11. White collar crime does pay. 285 million dollar fine over a billion dollar deal is chump change.