April 17 A Massachusetts pharmaceutical company
filed a lawsuit against Citigroup Inc (C.N) over the sale of
auction-rate securities (ARS), court documents show.
In a lawsuit filed with the United States District Court in
Massachusetts on Thursday, Braintree Laboratories alleged that
Citigroup sold the firm $33.2 million of the securities, even
though the market for them had collapsed.
Auction-rate debt has rates that reset in periodic
Citigroup concealed from regulators and customers its
continued sales of such toxic instruments by means of false and
misleading descriptions, and also destroyed relevant evidence
concerning its wrongdoing," Braintree said in the filing.
Braintree bought the securities between June and August
A Citigroup spokesman in Asia did not immediately return a
Reuters email seeking comment.
The auction-rate market froze early in 2008 in the wake of
a credit crunch that destroyed the top ratings of some
insurance companies that insured much of the debt.
Citigroup, last year, agreed to return to individual
investors, small businesses and charities $7.5 billion of their
money from ARS and to use its "best efforts" to liquidate by
the end of 2009 about $12 billion worth of the securities it
sold to retirement plans and other institutional investors.
(Reporting by Ajay Kamalakaran in Bangalore; editing by Simon
Jessop and Derek Caney)