Citi 'ready to settle' in securities miss-selling case

7 August 2008

Citigroup is looking to settle with the New York attorney-general over its alleged miss-selling of auction-rate securities, the Wall Street Journal reports.

Anonymous sources close to the matter told the newspaper that around $5 billion of the instruments would be bought back from investors, and a further fine of $100 million would be paid to Andrew Cuomo's office.

This represents a significant setback for Citi chief executive Vikram Pandit, who vowed earlier this year to restore the credit crunch-hit bank's battered balance sheet through a "get fit" programme.

Along with UBS, Citi had been accused by Mr Cuomo of wrongly presenting the securities as risk-free investments to customers.

An investigation into the alleged miss-selling from financial regulator the Securities and Exchange Commission is also ongoing.

Citi has suffered around $40 billion in credit crisis-related losses and writedowns over the past year.

The bank declined to comment yesterday on the alleged settlement deal with the attorney-general.

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