Citigroup Inc. is the latest financial giant to become a target of litigation concerning how it peddled auction-rate securities.
Two lawsuits have been filed in U.S. District Court in New York charging that the company deceptively marketed the securities as liquid equivalents to money-market funds and did not reveal material information about them, according to press reports. One of the suits alleges that, rather than “disclosing the true nature of ARS and the substantial liquidity risks associated with them, defendants continued to push as many ARS[s] as possible unto its customers in order to unload inventory off its already troubled balance sheet,” according to the wire service.
For its part, Citigroup says that “we believe them to be without merit and will defend [ourselves] against the actions,” Alex Samuelson, a company press representative, told CFO.com.
The lawsuits are seeking class-action status on behalf of investors who bought auction-rate securities through Citigroup between late March 2003 and February 13, 2008, according to the report.
Other major financial firms that have been sued over the securities in the past few weeks include Merrill Lynch & Co., Deutsche Bank AG, UBS AG, and, most recently, Morgan Stanley.