SEC loses civil fraud case against ex-Citigroup manager
NEW YORK (Reuters) - A federal jury found a former Citigroup Inc manager not liable on Tuesday of civil fraud charges of misleading investors in a pool of mortgages, one of the few individuals charged over the collapse of subprime mortgage investments.
Brian Stoker, who had worked on the bank's mortgage investments desk, had been charged by the U.S. Securities and Exchange Commission as part of a broader civil lawsuit against the bank.
At the two-week trial in Manhattan, the commission argued that Stoker failed to tell the buyers of a $1 billion Citigroup collateralized debt obligation that the bank had made a $500 million "short" bet that the mortgage pool would fail.
Stoker argued that he followed the bank's best practices and was singled out for blame.
U.S. District Judge Jed Rakoff had rejected late last year a $285 million settlement between Citigroup and the SEC over the investments. The bank and the commission are appealing that decision.
The case is SEC v. Stoker, U.S. District Court, Southern District of New York, No. 11-cv-7387.