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Written by 6:24 pm Blog, Securities Fraud Articles

Judge Questions Citigroup CDO Settlement Deal

We recently blogged about a proposed deal between Citigroup and the SEC to resolve fraud charges related to collateralized debt obligations. The SEC had reported that Citigroup, “[had] agreed to settle the…charges by paying a total of $285 million, which will be returned to investors.”

The SEC “charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress.”

Since the $285 million settlement agreement was announced, however, a US District Judge has questioned the agreement. Bloomberg.com reports that the “settlement with the U.S. Securities and Exchange Commission was questioned by a federal judge who asked both sides to justify the accord as fair.” Judge Jed Rakoff set a date of November 9th for a hearing regarding the proposed settlement.

In his response to the proposed settlement which included 9 key questions that he wants answered, according to Bloomberg, Judge Rakoff, “told the parties to address whether the public has an interest in determining if the SEC claims against Citigroup are true and how the amount of loss to victims and the proposed judgment against the bank were calculated.” He further asked, “How can a securities fraud of this nature and magnitude be the result simply of negligence?”

The SEC plans on defending the proposed agreement and The White Law Group will continue to monitor this situation as it progresses.

If you have concerns about your investment in Citigroup or other CDO’s and would like to speak to a securities attorney about the investments and your potential for recovery you may call our Chicago office at 312/238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

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