Citigroup (C) 01 (May 08 - Nov 08)

[kennynah]

we all thought wrong...we thought AG is just going to slap their hands with a small fine...

fined they got...$50Mil....small change...BUT, they are going to redeem some $7Bil from institutions and individuals...

shares being hammered as a result...that's if u consider losing some 3% as being hammered...as the AG office was announcing the decision to exercise punitive actions against C

[ishak]

Citigroup agrees to buy back $7 billion auction-rate securities
Thursday August 7, 11:30 am ET
Reuters

(Reuters) - NY Attorney General Andrew Cuomo says Citigroup to buy back more than $7 billion illiquid auction-rate securities by November 5.

* Agrees to pay $100 million in penalties in auction rate settlement
* Cuomo says Citigroup to buy back debt from retail customers, charities, and small- to mid-sized businesses
* To reimburse investors who sold auction-rate securities at a discount after the market failed
* Cuomo says Citigroup to expeditiously provide liquidity solutions to institutional investors
* In auction rate settlement agrees to public arbitration process to resolve claims of suffered by retail investors
* Cuomo says Citigroup civil penalty includes $50 million to state, $50 million to North American Securities Administrators Association
* Cuomo says reimbursement to go to more than 40,000 customers nationwide

[kennynah]

oopppsss...$100mil fines....i got that wrong earlier...

[ishak]

50 or 100 mil is still not too bad, it is the buy back with a stipulated time frame somemore that will drown them again.
Might be able to see 16 soon.

[ishak]

ML and UBS could be next to be forced to buy back.

Citigroup Settles Securities Probe for Up to $20 Billion
By CNBC.com With Wires
07 Aug 2008 | 09:45 AM ET

Citigroup reached a settlement with New York state and federal regulators to buy back up to $20 billion in auction-rate securities.

The settlement, announced Thursday, requires Citigroup to buy back securities from retail customers, charities and small to mid-sized businesses by Nov. 5.

Citigroup will also have to pay New York state a $50 million civil penalty, and a separate $50 million civil penalty to the North American Securities Administrators Association.

The move settles allegations that the banking giant wrongly told customers the debt securities were safe.

New York Attorney General Andrew Cuomo, who has threatened to charge Citigroup with fraudulently marketing auction-rate securities, made the announcement at a news conference.

The U.S. Securities and Exchange Commission made a similar announcement in Washington that Citigroup was settling federal allegations of fraud. Click here to watch the SEC news conference.

Separately, Massachusetts' attorney general said Morgan Stanley has agreed to pay $1.5 million to reimburse investments in auction-rate securities.

Citigroup has been in talks with Cuomo's office, other state securities regulators and the SEC.

Watch Steve Liesman's report on the Citi settlement at left.

Auction-rate securities have interest rates that reset periodically. The $330 billion market was once considered safe, but much of it remains frozen after a February meltdown in which Wall Street brokerages stopped supporting the debt.

A settlement with Citigroup could be a template for settlements by other companies that face civil charges over auction-rate debt.

Regulators have accused Merrill Lynch and Swiss bank UBS of fraud over the securities.

Last Friday, Cuomo's office threatened to charge Citigroup with fraudulently marketing and selling auction-rate securities and destroying documents that had been subpoenaed.

The office accused Citigroup of wrongly telling customers that auction-rate debt was safe, liquid and the equivalent of cash.

Citigroup has said it was also responding to subpoenas from Massachusetts and Texas over the debt.

Citigroup was the largest underwriter of auction-rate debt in all but one year this decade, Thomson Financial data show.

[kennynah]

house of cards toppling man....

AG may have jurisdiction over MER but UBS, i duno man...

[ishak]

Citigroup Inc. (NYSE: C)
August 07, 2008

Citi Statement on ARS Settlement

New York – Citi today issued the following statement regarding the settlement announced today between the Company and the New York Attorney General, the Securities and Exchange Commission, and other state regulatory agencies:

"Our most important focus continues to be on helping our clients. Since the beginning of the Auction Rate Securities ("ARS") crisis, Citi has worked diligently with issuers, investors, and regulatory authorities to obtain liquidity for holders of illiquid ARS. We have made tremendous progress on these efforts, and, in fact, more than fifty percent of our retail clients' holdings in ARS have been redeemed or auctioned at par since the crisis began.

"We are pleased to reach this agreement in principle with the New York Attorney General, the Securities and Exchange Commission, and other state regulatory agencies. We remain committed to continuing our work on initiatives that will secure the best and fastest route to providing liquidity to our clients."

Key Settlement Terms and Expected Impact

* By November 5, 2008, Citi will offer to purchase at par ARS that are not auctioning from all Citi individual investors, small institutions (as defined by the terms of the settlement), and charities that purchased ARS from Citi prior to February 11, 2008.

* The par value of the ARS currently eligible for purchase from individual investors, small institutions, and charities totals approximately $7.3 billion. The capital impact of bringing these assets onto Citi's balance sheet is expected to be de minimis.

* Based on the ARS currently eligible for purchase and our current market value estimates, the difference between the purchase price and the market value is estimated to be in the range of $500 million on a pre-tax basis. The actual pre-tax loss to Citi as of the date of purchase will depend on the market value at that time and the amount of securities purchased.

* Should individual investors, small institutions, and charities need interim liquidity, they can borrow from Citi the par amount of their ARS on a non-recourse basis. Such loans will become fully due and payable as soon as the proceeds of the par purchase are credited to their account or when the investor declines the purchase offer.

* Citi will work with issuers and other interested parties to provide liquidity solutions for Citi institutional investor clients. In doing so, Citi will use its best efforts to facilitate issuer redemptions and/or to resolve its institutional investor clients' liquidity concerns through resecuritizations and other means. The New York Attorney General will monitor Citi's progress and, beginning on November 4, 2008, retains the right to take legal action against Citi with respect to its institutional investor clients. The other regulators have entered into a similar arrangement but with a December 31, 2009 date.

* Citi will refund refinancing fees to municipal ARS issuers that issued ARS in the primary market between August 1, 2007 and February 11, 2008, and refinanced those securities after February 11, 2008.

* Citi will pay a $50 million fine to the State of New York and a $50 million fine to the other state regulatory agencies.

* Citi neither admits nor denies allegations of wrongdoing.

[kennynah]

Citigroup Inc. (NYSE: C)
August 07, 2008

Citi Statement on ARS Settlement
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* The par value of the ARS currently eligible for purchase from individual investors, small institutions, and charities totals approximately $7.3 billion. The capital impact of bringing these assets onto Citi's balance sheet is expected to be de minimis.

* Based on the ARS currently eligible for purchase and our current market value estimates, the difference between the purchase price and the market value is estimated to be in the range of $500 million on a pre-tax basis. The actual pre-tax loss to Citi as of the date of purchase will depend on the market value at that time and the amount of securities purchased.

de minimis
meaning : so small or minimal in difference that it does not matter or the law does not take it into consideration

[ishak]

Citigroup Inc. (NYSE: C)
August 07, 2008

Citi Statement on ARS Settlement
****
****
* The par value of the ARS currently eligible for purchase from individual investors, small institutions, and charities totals approximately $7.3 billion. The capital impact of bringing these assets onto Citi's balance sheet is expected to be de minimis.

* Based on the ARS currently eligible for purchase and our current market value estimates, the difference between the purchase price and the market value is estimated to be in the range of $500 million on a pre-tax basis. The actual pre-tax loss to Citi as of the date of purchase will depend on the market value at that time and the amount of securities purchased.

de minimis
meaning : so small or minimal in difference that it does not matter or the law does not take it into consideration

Hiaks, i was just reading the meaning on wiki. They should just write plain english, "The capital impact of bringing these assets onto Citi's balance sheet is expected to be insignificant", could do just fine.
Learned some latin today, thanks.

[kennynah]

* Based on the ARS currently eligible for purchase and our current market value estimates, the difference between the purchase price and the market value is estimated to be in the range of $500 million on a pre-tax basis.

so, all in all, the total impact should be in the region of $600mil ($100mil fine + some losses of $500mil).... not too large a loss considering C's earnings capacity was around $5bil annually....but that's way before all these mess started.