* Former bank manager at least negligent - SEC attorney
* "Where's Waldo?" defense lawyer asks jury
* Jury to decide civil securities fraud charges
By Grant McCool
NEW YORK, July 30 A jury was asked on Monday to
decide whether one of the few individuals charged over the
collapse of subprime mortgage investments intentionally misled
investors in a $1 billion Citigroup Inc deal or had been
singled out to take the blame for losses.
Brian Stoker, a former manager on Citigroup's mortgage
investments desk, could be barred from the financial industry
and ordered to pay fines if convicted on two civil counts of
securities fraud. His trial in U.S. District Court in Manhattan
began two weeks ago.
The U.S. Securities and Exchange Commission contends that
Stoker failed to tell buyers that the bank selected some of the
assets for a mortgage pool known as a collateralized debt
obligation and made a $500 million "short" bet that it would
The transaction caused more than $700 million in investor
losses, the SEC said.
In closing arguments, SEC lawyer Jeffrey Infelise told the
jury that Stoker's conduct was more than a risky high-stakes bet
as the defense has argued.
"Citigroup stacked the deck and Brian Stoker dealt the
cards," Infelise said. "Even if you don't believe it was
intentional, it had to be negligent."
Infelise also said emails from Citigroup managers introduced
at trial showed the bank wanted to identify assets it could bet
against. "We are trying to find the worst performing assets,"
one of the emails said.
Stoker, of Pound Ridge, New York, was the only person
charged in a broader case against Citigroup by the regulator.
Last week, he took the stand in his own defense, testifying that
he followed best practices by keeping lists of assets and urging
his team to review them before marketing to potential investors.
In November 2011, U.S. District Judge Jed Rakoff, who is
overseeing the trial, rejected a $285 million settlement between
Citigroup and the SEC over allegations surrounding the
investment pool. The judge said that failure to require the bank
to admit or deny the charges left him no way to know whether the
pact was fair. A federal appeals court in New York is expected
to consider later this year whether that rejection was proper.
In his closing statement Monday, Stoker's lawyer, John
Keker, described his client as a "straight arrow."
Keker told the jury that "most of the trial had nothing to
do with Brian Stoker" and that it reminded him of the children's
book, "Where's Waldo?"
Some jurors giggled when Keker displayed a reproduction of
the cover of a Waldo book. In the books, the reader tries to
find the Waldo character in a crowd of other characters.
"Everyone in this CDO group, including the managing
directors, knew as much or more than Brian Stoker did," Keker
The case is SEC v. Stoker, U.S. District Court, Southern
District of New York, No. 11-cv-7387.