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SEC v. Citigroup Inc. Case No. 10-cv-01277-ESH (D.D.C.)

Sept. 1, 2022

On July 29, 2010, the Commission filed a complaint against Citigroup Inc. ("Citigroup" or "Defendant"). The complaint alleged that, from as early as April 2007 through November 2007, the Defendant repeatedly made misleading statements about the extent of its holdings of assets backed by sub-prime mortgages in earnings calls and public filings. Throughout that time period, Citigroup represented that its sub-prime exposure in Citigroup's investment banking unit, Citi Markets & Banking, was $13 billion or less, when in fact, at all times during that period, the investment bank's sub-prime exposure was over $50 billion. The $43 billion that Citigroup failed to disclose consisted of two categories of sub-prime-backed assets, "super senior" tranches of collateralized debt obligations ("CDOs") and "liquidity puts." Citigroup only disclosed the extent of its holdings of the super senior tranches of CDOs and the liquidity puts in November 2007, after a sharp decline in their value. The misleading disclosures were made at a time of heightened investor and analyst interest in public company exposure to sub-prime mortgages. See Complaint.

The Defendant was ordered to pay a total of $75,000,001.00 in disgorgement and penalties. The Clerk was ordered to hold the funds in an interest bearing account with the Court Registry Investment System (collectively, the "Fund"), pending further order of the Court. The Commission was ordered to propose a plan to distribute the Fund, subject to Court approval, and that such a plan is to provide that the Fund be distributed pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. The Defendant was further ordered responsible for the costs associated with the distribution of the Fund. See Defendant's Final Judgment.

The Defendant has paid a total of $75,000,001.00 into the Fund for the distribution to harmed investors ("Distribution Fund").

On December 17, 2010, the Court appointed Damasco & Associates LLP as the Tax Administrator to fulfill the tax obligations of the Distribution Fund. 

On October 6, 2016, the Court appointed Garden City Group, LLC as the Distribution Agent to oversee the distribution of the Distribution Fund to harmed investors.

On January 31, 2018, the Commission filed a motion to approve a distribution plan (the “Plan”) for the Distribution Fund. See the Commission’s Motion with the Plan

On February 15, 2018, the Court entered a minute order approving the Plan.

The Plan provides for the distribution of the Distribution Fund to investors who were harmed by the improper conduct alleged in the Commission’s underlying lawsuit.

On September 30, 2020, the Court entered an order transferring all funds held by the Court, less registry fees and expenses to the Distribution Agent. The Court further ordered that the Fair Fund, less a reserve of $19,750.00 for taxes and related fees and expenses of the Tax Administrator, plus $466,443.73 in residual funds received from the related class action In re Citigroup Securities Litigation 1:07-cv-9901 (SNDY), be distributed to Eligible Claimants in accordance with the terms of the Plan. See the Court’s Order.

For more information, please contact the Distribution Agent:

Garden City Group, LLC
Telephone Number: 866-879-5545

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