Citi to Buy Back Auction Rate Securities

by MsMcReality | August 7, 2008 at 09:00 am

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Citigroup Inc. will buy back more than $7 billion in auction-rate securities and pay $100 million in fines as part of settlements with federal and state regulators announced Thursday.

Citi Group, which is apparently the largest financial institution in the United states owes more than $50 million in civil penalities to regulators in all 50 states and the District of Columbia. All transactions are expected to be completed in November.

New York-based Citigroup neither admitted nor denied wrongdoing under the settlements.

The reason for the sudden civil-penalities is due to market collapse in February, costing more than $330 BILLION in auction-rate securities.

Cuomo's office sued the Swiss bank UBS AG last month over billions of dollars in sales in auction-rate securities, and states including Massachusetts and Texas have filed similar complaints. Massachusetts last week accused Merrill Lynch of fraud in promoting the sale of auction-rate securities.