Citi to be charged over miss-selling securities

4 August 2008

Citigroup employees illegally destroyed subpoenaed documents relating to its Global Markets and Citi Smith Barney units, the office of the New York general attorney has claimed.

Andrew Cuomo's office also believes that Citi miss-sold auction-rate securities by wrongly telling customers they were risk-free - and will soon file charges against the bank as a result.

The comments follow a similar against UBS last week, another bank which has come under the spotlight for its auction-rate securities sales.

On Friday, the Securities and Exchange Commission also announced that it would be investigating Wall Street firms on their selling of the financial instruments.

In an emailed statement, Citi indicated that it often recycled tapes as part of company policy, and did not intentionally destroy evidence which the attorney could have used in its investigation.

"[T]here is simply no basis for claims to the contrary [that we acted in clients' best interests]," it continued.

The auction-rate securities sector is worth around $330 billion per year.

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