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Forum Post: Citigroup Fined $285 Million by SEC for Ripping-Off Investors

Posted 2 years ago on Oct. 22, 2011, 7:10 p.m. EST by AmericanRedWhiteBlue (126)
This content is user submitted and not an official statement

All the below from:

http://www.marketwatch.com/story/citi-to-pay-285-million-over-sec-charges-2011-10-19?siteid=yhoof

Citigroup Inc. on Wednesday agreed to pay a $285 million fine to settle civil charges brought by the Securities and Exchange Commission that it sold securities backed by mortgages that it simultaneously bet against.

The regulator alleges that Citigroup Global Markets structured and marketed a $500 million collateralized debt obligation that was backed by subprime loans, and then bet against those mortgage-related assets, which it didn’t disclose to investors.

According to the agency, one trader in an email called the portfolio “dogshit” and “possibly the best short ever.”

The CDO in question defaulted within months, leaving investors with losses, while Citigroup made $160 million in fees and trading profits, according to the SEC.

23 Comments

23 Comments


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[-] 1 points by paulg4 (82) 2 years ago

Lunch money! Chump change!

[-] 1 points by Rico (3027) 2 years ago

Good. The "SYSTEM" is working.

[-] 1 points by AmericanRedWhiteBlue (126) 2 years ago

The system is broken. Citi Group is "Too Big to Fail." Given that it is too big to fail, it needs broken up because it is a threat to the financial security of the United States.

This "Slap on the wrist" is going to be absorbed as a "Cost of doing business." When some Business Analyst for Citigroup does the math, and sees that, over all, it is financially better for the company to engage in this crap, than behave honorably, said crap will continue (I have an MBA with a Concentration in Finance (with significant business experience, so I know what I"m talking about). In corporate terms: If the revenue-to-cost ratio decreases with a particular business decision (over the long term) then the business should "do it." Although this can lead to horrific moral issues, businesses don't often care.....once again the system is broke!!!

[-] 1 points by lyn123 (123) 2 years ago

It has been hard to gather enough evidence for criminal convictions. The SEC is changing strategies by initiating civil suits. Goldman has paid out and they are still working on others. The 1% are trying to stop SEC funding. We need to support our regulators- keep them fighting! http://www.huffingtonpost.com/2011/09/30/sec-financial-crisis_n_988687.html

[-] 1 points by MonetizingDiscontent (1257) 2 years ago

Yep, Citigroup agreed to only pay $285million after ‘defrauding investors in a $1BILLION derivatives deal’.

What kind of punishment is that?

[Deleted]

[-] 1 points by gnomunny (6287) from St Louis, MO 2 years ago

That pales in comparison to what Goldman Sachs made doing the exact same thing. Not including profiting even more on the bailout.

[-] 1 points by MonetizingDiscontent (1257) 2 years ago

Hi gnomunny, could you share that link? I'd love to see those numbers!

[-] 1 points by gnomunny (6287) from St Louis, MO 2 years ago

Hi, MD. Sorry it took so long to respond. Just got back online. I'll try to find that link somewhere in here, it's actually for an article from Rolling Stone magazine from a few years back. Let me look around (unless you've found it already, it was posted by a few different people).

[-] 0 points by IndyGuy (81) 2 years ago

So the government is getting $285 million from Citigroup.

It was the government that forced banks like Citigroup to give sub-prime mortgages to people.

Obama himself once represented an ACORN group in suing Citibank to give mortgages to minorities with bad credit.

[-] 1 points by AmericanRedWhiteBlue (126) 2 years ago

IndyGuy Wrote:

It was the government that forced banks like Citigroup to give sub-prime mortgages to people.

Holy off topic batman!!! Are you implying that it's the government's fault that Citi committed fraud against investors? Next you'll say that it's Aunt May's fault...if only she hadn't signed the mortgage contract w/ uncle Ben, and if only Uncle Ben hadn't been killed by that crook (that Peter Parker could have stopped but he didn't) then Citi would not have been forced to rip-off investors. Obviously, Citi riping off investors was caused by Aunt May!!! Citi isn't culpable for fraud? Give me a freaking break!!!

Wow, if you are really implying that, then you really drank the faux-news cool-aid.

Somebody may want to unplug IndyGuy from the "Corporations-can-do-no-wrong" matrix...

[-] 0 points by happybanker (766) 2 years ago

People forgot about the loans that were jammed down banks throats.

[-] 1 points by AmericanRedWhiteBlue (126) 2 years ago

So when you are saying that "People forgot about the loans that were jammed down banks throats", you are saying that, under this condition, banks are allowed to commit fraud? That's insane!!!

[-] 0 points by happybanker (766) 2 years ago

Not at all. Citi agreed to settle without admitting or being found guilty of anything. If fraud is committed and anyone is found guilty, they should be punished.

[-] 1 points by AmericanRedWhiteBlue (126) 2 years ago

Please!!!

Do you seriously think Citigroup "Just Happened" to agree to pay $285 MILLION, because they wanted the problem to go away, but did no wrong?

CITIGROUP WAS GUILTY AS HELL AND GOT OFF RELATIVELY EASILY!!!

Not everyone is as naive as you think!

Stop acting like a shill!

[-] 0 points by happybanker (766) 2 years ago

And you think the SEC let them off easy if the had rock solid evidence that they could prove?? And you are calling me naive?

[-] 1 points by AmericanRedWhiteBlue (126) 2 years ago

Yep, I think Citigroup was guilty as hell.

You need to develop better reading comprehension skills if you think I called YOU naive (I recommend reading the sentence again---I choose my words very precisely.)

I would LOVE to have been on the jury, if that Citigroup case went to trial....(by the way, I went to law school and have an MBA---concentration in Finance.)

[-] 0 points by happybanker (766) 2 years ago

I appologize. I misread your naive comment, it was actually a shill that you called me. And yes, I'm sure they were guilty. Problem is, it doesn't matter what you and I think or what degrees we BOTH hold. It's what a jury thinks that matters.

[-] 1 points by AmericanRedWhiteBlue (126) 2 years ago

Thank you. You are honorable (sincerely). I apologize for calling you a shill-you've proven me wrong.

I agree with you on the jury comment---that's why I would like to have served (my country) on that jury.

We both know that deciding to go to trial, or not, is a RISK Management decision for a big company, not a "guilty-or-not." decision.

If a big company can control the risk of paying a high fine/etc. by guaranteeing to pay a lesser fine, then the big company will pay the lesser fine. It's just "Risk Management Calculus" to those guys, not justice or "Fair." Their (big company's) attitude is what's wrong with our country.

[-] 0 points by happybanker (766) 2 years ago

I agree with you completely and admire your knowledge.