Thank you for sharing!

Your article was successfully shared with the contacts you provided.

There’s a reason why the Securities and Exchange Commission didn’t name any Citigroup executives in its settled complaint over disclosures the company made about its subprime exposure: Nobody intentionally misled shareholders. That’s the heart of the argument that Citigroup’s lawyers at Paul, Weiss, Rifkind, Wharton & Garrison and Wachtell Lipton Rosen & Katz made in a brief filed Monday evening supporting a $75 million settlement with the Securities and Exchange Commission. Last month, Washington, D.C., federal district court Judge Ellen Segal Huvelle postponed approval of the deal, citing her concerns with the pact. She wondered why the SEC named Citigroup’s former chief financial officer, Gary Crittenden, and Citigroup’s former head of investor relations, Arthur Tildesley, in a separate administrative action, but didn’t name any Citi executive in the settled complaint. Citigroup echoed the arguments made last week by the SEC, which said that it reviewed a massive evidentiary record and concluded that the company had a poor disclosure process (the SEC called it “deeply flawed”) but did not find that anyone intended to mislead shareholders. The SEC explained that it targeted Crittenden and Tildesley because they were most closely tied to the disclosures. Citigroup argued that it was under no obligation to report its subprime exposure in the second and third quarter of 2007. It made a good faith effort to correctly report its exposure, the company argued, and when it realized it had additional subprime exposure, it promptly disclosed it to the market. The company said that it has since taken steps to improve its disclosure process. “We argued during the course of the commission’s investigation that neither the company nor any individuals should be charged,” wrote lawyers for Citigroup. “In particular, we argued that while the process of crafting the July and October disclosures had been imperfect, there was no ‘villain’ in the story — that is, Citigroup did not believe, and still does not believe, that any of its personnel acted with an intent to mislead investors.” Citigroup argued that the proposed settlement was “fair, reasonable, and appropriate,” but that it had hoped to get off with no penalty. “While the commission’s analysis certainly reflects a rational exercise of its discretion, Citigroup argued against the imposition of any penalty, contending, among other reasons, that the company’s current shareholders would bear the expense,” Citigroup’s lawyers wrote. The company, however, settled to avoid the uncertain risk of litigation, the filing states.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at customercare@alm.com


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.