PA Securities Commission Orders Citigroup to Refund Hundreds of Millions to More...

PA Securities Commission Orders Citigroup to Refund Hundreds of Millions to
More Than One Thousand State Investors

HARRISBURG, Pa., July 14 /PRNewswire/ -- The Pennsylvania Securities
Commission (PSC) today ordered Citigroup Global Markets Inc., to repurchase
so-called auction rate securities (ARS) totaling in the hundreds of millions
of dollars from an estimated 1,000 or more Keystone State investors in the
wake of the collapse of the market for this specific financial instrument in
early 2008.

The final order approved by the commission also requires Citigroup to pay a
$2.31 million assessment to the Commonwealth for its role in the auction rate
securities market.

"Evidence aggregated in a multi-state ARS investigation in which the
Pennsylvania Securities Commission played a key role found that Citigroup
engaged in unethical or dishonest business practices and failed to supervise
its agents for its sale of auction rate securities to investors," PSC Chairman
Robert Lam said.

"The commission's action sends a strong message that Pennsylvania will not
tolerate unethical and unlawful behavior in the securities industry," said
Commissioner Tom Michlovic.

Commissioner Steven Irwin said Citigroup "marketed and sold these securities
as safe, liquid and cash-like investments when, in fact, they were long-term
investments subject to a complex auction process that failed in early 2008,
leading to illiquidity and lower interest rates for investors."

The commission estimated that more than 1,200 Pennsylvania retail investors
and 167 institutional investors held auction rate securities from Citigroup as
of January 21, 2008, shortly before the market collapse. Under the
commission's order, Citigroup must offer to repurchase the securities from the
retail investors but not the institutional or professional investors.

"From the day these auctions failed in February, 2008, the Pennsylvania
Securities Commission has been seeking much-needed relief and liquidity for
investors stuck with these securities," Lam said. "I am pleased that Citigroup
has agreed to do what's right by repurchasing their clients' positions and I
expect other firms that sold these securities in Pennsylvania to do the same."

The $2.313 million assessment represents Pennsylvania's pro rata share of a
$50 million settlement negotiated by a 12-state task force of state regulators
formed through the North American Securities Administrators Association
(NASAA) to probe possible wrong-doing in the wake of the ARS market failure.
Pennsylvania's securities regulators played a major role in coordinating the
investigation of investor complaints.

"We were particularly concerned about the retail investor - the individual,"
Irwin said. "Institutional investors can be expected to be more sophisticated
or to rely upon independent financial and legal counsel. Individuals tend to
rely on their brokers."

Michlovic noted that the securities commission is continuing its investigation
of other firms. "This is a significant and on-going regulatory effort," he
said.

Concerned citizens may contact the Pennsylvania Securities Commission,
toll-free, at 1-800-600-0007, during normal business hours or on the web at
www.psc.state.pa.us.

SOURCE Pennsylvania Securities Commission

Mike Byrne, chief counsel of Pennsylvania Securities Commission,
+1-717-783-5177