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Citigroup To Be Charged By Cuomo

New York State Attorney General Andrew Cuomo plans to sue two Citigroup Inc. units over their marketing and sales of auction-rate securities, according to media reports Friday.

Cuomo’s office intends to sue Citigroup Global Markets Inc. and Smith Barney for fraudulent marketing of the securities and for destroying documents under subpoena, reports said. A five-month probe revealed that Citigroup made material misrepresentations and omissions in its underwriting, distribution and sale of auction rate securities, including assuring customers that these securities were as liquid as cash, according to the reports.

Cuomo outlined his intentions in a letter to Citigroup’s general counsel dated Friday, saying that charges were imminent.

In the letter, the New York Attorney General’s office alleged that the nation’s largest bank “has repeatedly and persistently committed fraud by material misrepresentations and omissions” in the underwriting, distribution and sale of auction rate securities, touting them as safe, cash-equivalent investments.

Cuomo’s office claimed that the sale of these securities had “a severe detrimental impact” on tens of thousands of Citigroup customers.

The AG also claimed that Citigroup “destroyed recordings of telephone conversations” related to the marketing and sale of auction-rate securities.

(CNN Money / YWN Desk – NYC)

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