Southern District of New York Judge Sidney Stein on Monday allowed a suit against Citigroup by a class of its bondholders to proceed. The bondholders, represented by Bernstein Litowitz Berger & Grossmann, allege that in 48 bond offerings between May 2006 and August 2008, Citigroup did not fully disclose its “toxic mortgage-linked exposures.”
Stein dismissed some claims relating to Citigroup’s exposure to structured investment vehicles and auction-rate securities, but he allowed bondholders to proceed with claims involving the bank’s exposure to subprime mortgage-backed collateralized debt obligations and Citigroup’s allegedly insufficient reserves for losses in its residential mortgage loan portfolio. Twenty-eight current and former Citigroup officers and directors, as well as more than a dozen underwriter defendants, have also been named in the class action.
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