News today broke that Citigroup may be close to reaching a $100 million settlement with federal and state regulators over charges stemming from underwriting and marketing auction rate securities. What's more, Citi may buy back as much as $5 billion of the auction rate securities from investors.
Sources tell DealBreaker that what prompted the quick move to settle by Citi was not a fear that investigators would uncover wrong-doing. Citi executives are confident that they correctly disclosed the risks of the securities to customers who purchased them. Rather, Citi executives are concerned of further damaging their reputation. Many executives at Citi still remember that the reputation of the bank was badly tarnished by ongoing regulatory challenges and investigations a decade ago, and fear a revival of those problems.
What's more, the current chief executive of Citi was not in place at the time the securities were marketed. He is said by people familiar with the situation to be confident that the settlement will not reflect badly on him.
Of course, this story line serves the interest of Citi executives, who may want to paint the huge settlement deal as dealing with a perception problem rather than a substantive securities law issue. (And with that sentence we probably just guaranteed that these Citi executives will never speak to us again. Adios, guys.)
Posted by guest , Aug 06, 2008 3:48PM
$100??? Whoaaaaaaaaaaa
Posted by John Carney , Aug 06, 2008 3:50PM
Oh, come on. We're having a tough day here.
Posted by guest , Aug 06, 2008 4:06PM
bad pattern for airlines http://tfpoi.com/2008/08/06/airlines-forming-moonite-chart-pattern/
Posted by Anal_yst , Aug 06, 2008 4:09PM
Surprised its only $100m, i'm sure when all the brokerage houses settle that number will be significantly higher
Posted by guest , Aug 06, 2008 4:13PM
"Rather, Citi executives are concerned of further damaging their reputation."
so they turned around and fired the most popular trader on Wall Street. LOL!
Posted by guest , Aug 06, 2008 4:20PM
who does #5 refer to?
Posted by John Carney , Aug 06, 2008 4:25PM
#5: Email me at john@dealbreaker.com with the details.
Posted by guest , Aug 06, 2008 4:30PM
#7:Get those details John, print 'em and you'll have something worth reading for a change.
Posted by guest , Aug 06, 2008 4:32PM
I am astounded you are so out of touch as to not know who #5 refers to, even from a competitive standpoint...
Posted by guest , Aug 06, 2008 5:22PM
i work at C and have no idea who you are talking about...
Posted by guest , Aug 06, 2008 6:17PM
Michael Klein, you idiots. (right bess?)
Posted by guest , Aug 06, 2008 6:28PM
I wish I had five billion one hundred million to clean up my perception problems.
Posted by Anal_yst , Aug 06, 2008 6:48PM
michael klein isn't exactly groundbreaking news if thats what #5 was referring to...
Posted by guest , Aug 06, 2008 10:10PM
just what C needs - $8bn of more student loan auctions on their books in addition to the $8bn they are already long. that's a $4bn MTM hickey they way the rest of the poor slobs who bought that crap are marking their positions.
Posted by Lowly Assistant , Aug 07, 2008 12:38AM
Not that I particularly enjoy the sadness of others, but it gives me great relief walking past the offices on Greenwich St. seeing those tired gym bags slumped over shoulders, as they meander towards car service. Two years ago they carried themselves with such glee and optimism! Although I've never seen Vikram that far south, I can only imagine the pain in his eyes regarding young analysts opting for the nearest bodega to entertain themselves with a sandwich, as oppose to the overcooked burgers found at lesbian bars on Hudson. 'Tis madness, sadness, and all other adverbs that scream, “How fucking low must this crazy world venture for me to lose a sense of identity with this society?!” My condolences, Viceroy Vikram, for your troubles and such.
-Lover of Misery, and All Things Completely Fucked
Posted by royalbankofawesome , Aug 07, 2008 6:17AM
how come no one has commented on the fact that because these bonds are not being auctioned they are making 20% in some cases. Thats a pretty big incentive to buy them back in my view
Posted by guest , Aug 07, 2008 6:55AM
#5 referring to TAR?
Posted by guest , Aug 07, 2008 8:30AM
@11... Klein was the head of the investment bank and more recently head of capital markets but he was definitely not a trader unless you call some corporate finance guy a "mine-yours shag" trader.
Nice work idiot- don't bother appealing to Bess...
Posted by guest , Aug 07, 2008 9:21AM
TAFR.