Summary of Case:
Scott+Scott has filed a securities class action against Citigroup, Inc. (Ticker: C; C.M) ("Citi" or the "Company") on behalf of all persons who acquired depositary shares of the 8.50% Non-Cumulative Preferred Stock, Series F ("Securities") of Citi pursuant and/or traceable to a false and misleading registration statement and prospectus ("Registration Statement") issued in connection with the Company's May 2008 initial public offering of the Securities ("Offering").
The Complaint alleges that defendants consummated the Offering pursuant to the false and misleading Registration Statement and Prospectus, selling 81.6 million shares of the Securities at $25 per share, for proceeds of over $2 billion. The Registration Statement incorporated Citi's financial results for 2007 and the first quarter of 2008. Citi ultimately announced huge multi-billion dollar writedowns associated with its exposure to subprime mortgages, related bonds called collateralized debt obligations ("CDOs"), and commercial real estate loans and investments, as well as loans to companies with low credit ratings, causing the price of the Securities to decline.
The true facts which were omitted from the Registration Statement were: (a) the Company's CDOs were impaired to a greater extent than the Company had disclosed; (b) the Company's commercial real estate loans were impaired to a greater extent than the Company had disclosed; (c) the Company's investments were impaired to a greater extent than the Company had disclosed; (d) the Company's loans to companies with low credit ratings were impaired to a greater extent than the Company had disclosed; (e) the assets in the Company's structured investment vehicles were impaired to a greater extent than the Company had disclosed; (f) defendants failed to properly record losses for impaired assets; (g) the Company's internal controls were inadequate to prevent the Company from improperly reporting its impaired assets; and (h) the Company's capital base was not adequate in light of the significant deterioration in the subprime market.
