New York AG Plans to Sue Citigroup
Last Friday, New York Attorney General Andrew Cuomo sent a letter notifying Citigroup Inc. that he plans to file suit against the U.S. banking giant alleging it used fraudulent tactics to sell auction-rate securities.
As Bloomberg News reports in “New York to Sue Citigroup Over Auction-Rate Sales,” the letter of intent also claimed Citigroup destroyed documents under subpoena. During the five-month investigation, the Attorney General’s office requested telephone conversation recordings related to the marketing, sale or distribution of action-rate securities. However, Bloomberg reporter Karen Freifeld writes, the recordings at the auction-rate securities desk were destroyed.
In the letter, Cuomo said:
“The investigation has revealed that Citigroup has repeatedly and persistently committed fraud by making material misrepresentations and omissions in connection with Citigroup’s underwriting, distribution and sale of auction-rate securities.”
Auction-rate securities are municipal or corporate debt securities or preferred stocks that pay interest at rates set through periodic auctions. The instruments typically have long-term maturity dates or no maturity date.
In mid-February, the auctions for the investment instruments failed. That meant investors were unable to sell their securities. To this day, auction-rate securities investors find themselves owning frozen assets.
Carey & Danis has filed class action lawsuits on behalf of persons who purchased auction-rate securities. Investors who wish to discuss their rights against any broker-dealer may contact Carey & Danis toll-free at 800-721-2519 or fill out our online contact form.
