Citigroup, Inc. (Voluntary FA Capital Accumulation)

Class Period: Nov 1, 2006 to Nov 30, 2008

Lead Plaintiff Deadline: May 29, 2009 + Deadline passed

Summary of Case:

A securities class action has been filed against Citigroup, Inc. ("Citigroup" or the "Company") on behalf of all persons or entities who between November 2006 and November 2008 (the "Federal Class Period"), acquired the restricted or deferred common stock ("CAP Shares") or stock option ("CAP Option" and, collectively with CAP Shares, the "Securities") through the Voluntary FA Capital Accumulation Program ("FA CAP") of Citigroup pursuant to the Company's false and misleading Offering Docuemnts issued in connection with the Company's offering and who were damaged thereby.

The claims arise out of the Company's heavy investments in subprime related financial instruments, in order to enjoy short-term profits associated with the housing bubble, even as it started to deflate. The complaint alleges that Citigroup's purchases of billions of dollars of subprime loans, starting at least as early as 2006, were reckless and would eventually lead to billions of dollars in write-downs and lost revenues. In fact, by the time the housing bubble fully burst, a staggering 43% of Citigroup's equity was tied up in subprime related assets, including $43 billion in credit derivative products. The Company also was exposed to massive consumer debt issues.  

The complaint alleges that defendants breached their fiduciary duty to the California participants by failing to preserve the assets that were diverted into the FA CAP and by failing to keep the participants reasonably informed about facts relevant to their participation in the FA CAP. Plaintiffs also allege that the provisions in the FA CAP relating to vesting and forfeiture of FA CAP benefits are illegal under California law.  

The complaint also alleges that Citigroup sold the Securities to employees in order to allow employees to have a percentage of their annual compensation paid in the form of awards of restricted common stock. The Offering Documents incorporated Citigroup's annual financial results as well as any future filings made with the SEC under Section 13(a), 13(c), 14 and 15(d). The Offering Documents, however, included untrue statements of material fact and omitted material information, namely, that: A) the Company's assets, including loans and mortgage-related securities, were impaired to a much larger extent than the Company had disclosed; B) the Company failed to properly record losses for impaired assets; C) The Company's internal controls were inadequate to prevent the Company from properly reporting the value of its assets; D) Citigroup was not as well capitalized as represented and would have to raise additional billions by selling equity in the Company to the U.S. government in order to prevent its total collapse; and E) the Company caused its structured investment vehicles to imprudently issue billions of dollars worth of commercial paper and short term notes based on false and misleading statements.

If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.