UPDATE 1-Citigroup seeks to end financier Hands' U.S. lawsuit over EMI

Thu Nov 28, 2013 12:33pm EST

* 2nd Circuit had ordered new trial over 2007 EMI buyout

* Citigroup accuses Guy Hands of "legal tourism"

By Jonathan Stempel

NEW YORK, Nov 28 (Reuters) - British financier Guy Hands is engaging in "legal tourism" by pursuing a U.S. lawsuit accusing Citigroup Inc bankers of defrauding him into overpaying for music company EMI Group Ltd, and his case should be dismissed because it does not belong in the United States, the bank said on Wednesday.

Citigroup, the third-largest U.S. bank, sought the dismissal less than six months after the 2nd U.S. Circuit Court of Appeals in Manhattan voided a November 2010 jury verdict against Hands' private equity firm Terra Firma Capital Partners over its 4 billion-pound (now US$6.5 billion) purchase of EMI.

In a Wednesday court filing, Citigroup accused Hands and Terra Firma of continuing the U.S. case under "false pretenses" after having "surreptitiously" filed three overlapping lawsuits in Manchester, England, in the event the U.S. case fell apart.

Citigroup also told U.S. District Judge Jed Rakoff, who oversees the U.S. case, that most key claims and witnesses are in or near England, and that the Manchester lawsuits are "proof positive that Mr. Hands and Terra Firma have no intention of accepting as final any decision of this court.

"The court," the New York-based bank said, "should not indulge Mr. Hands' and Terra Firma's continuing legal tourism."

David Boies, a partner at Boies, Schiller & Flexner representing Hands, was not immediately available for comment.

Terra Firma said in a statement that it had asked Citigroup if it would be willing to combine the new UK fraud claims with the existing fraud claim being heard in New York.

"Citigroup rejected this opportunity, leaving Terra Firma with no choice but to serve the claims on Citigroup in the UK. Citigroup's motion is simply an attempt to delay the existing U.S. claim from being heard," the private equity group said.

Hands had been seeking roughly $2 billion of damages from Citigroup, claiming that a banker had lied by telling him that a high bid for EMI was needed to top a rival bidder.

He said this induced him to overpay for the music company at the height of the buyout bubble, leading to heavy losses.

Citigroup eventually seized EMI and sold it in pieces after Terra Firma defaulted on some loans. The bank has denied wrongdoing and argued that Hands sued because of buyer's remorse.

In reviving the case on May 31, the 2nd Circuit said a new trial was needed because Rakoff instructed jurors improperly on English law, which governed the case.

EMI's catalog of artists has included the Beatles, Pink Floyd, Queen and Tina Turner as well as newer stars such as Coldplay, David Guetta and Katy Perry.

The case is Terra Firma Investments (GP) 2 Ltd et al v. Citigroup Inc et al, U.S. District Court, Southern District of New York, No. 09-10459.

1 GBP = US$1.628

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Comments (1)
SwapInfinity wrote:
Jonathan Stempel: My comment is regarding another article you had published on 8 November this year (available at http://www.reuters.com/article/2013/11/08/us-pwc-lawsuit-lipperconvertibles-fraud-idUSBRE9A70VD20131108). I have some information on fraud committed by another office of PwC. Please check http://www.swapinfinity.com/1_5_PwC-Fraud.html. PwC SDC India committed the fraud against my firm and their US counterpart did nothing on receiving our complaint.

Nov 29, 2013 11:14am EST  --  Report as abuse
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