Posted in Politics

SEC gets Citigroup to pay up

   October 20, 2011

The Securities and Exchange Commission yesterday 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. The CDO defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits.

Why did Occupy Wall Street start? –over scams like this that balked people out of their savings while the brokers made millions.

Citigroup has agreed to settle the SEC’s charges by paying a total of $285 million, which will be returned to investors.

“The securities laws demand that investors receive more care and candor than Citigroup provided to these CDO investors,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Investors were not informed that Citgroup had decided to bet against them and had helped choose the assets that would determine who won or lost.”

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