Litigation Release No. 22541 / November 21, 2012

Securities and Exchange Commission v. Brian H. Stoker, 11-Civ.-7388 (S.D.N.Y. filed Oct. 19, 2011)


The Securities and Exchange Commission (SEC) announced that on July 31, 2012, following a two week trial in the United States District Court for the Southern District of New York, a jury found that former Citigroup Global Markets Inc. employee Brian H. Stoker was not liable for violations of the Federal securities laws related to the issuance of a $1 billion collateralized debt obligation (CDO) called Class V Funding III. The SEC has not appealed the jury's verdict, and the time for appeal has expired.

The SEC originally filed its suit against Stoker on October 19, 2011. The SEC alleged that Citigroup structured and marketed Class V III and exercised significant influence over the selection of $500 million of the assets included in the CDO. Citigroup then took a proprietary short position with respect to those $500 million of assets. The Commission complaint alleged that Citigroup did not disclose to investors the role that it played in the asset selection process or the short position that it took. The SEC further alleged that Stoker was the Citigroup employee primarily responsible for structuring the Class V III transaction.

The SEC will continue to pursue its appeal of the District Court's denial of the proposed settlement with Citigroup in the related matter of Securities and Exchange Commission v. Citigroup Global Markets Inc., 11-Civ.-7387 (Rakoff, J.) (S.D.N.Y. filed Oct. 19, 2011).

For further information, please see Litigation Release Number 22134 (October 19, 2011).