This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7547776.stm

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Citigroup reaches SEC settlement Citigroup reaches SEC settlement
(about 6 hours later)
Finance firm Citigroup is set to buy back billions of dollars worth of securities, as part of a settlement with the US financial regulator.Finance firm Citigroup is set to buy back billions of dollars worth of securities, as part of a settlement with the US financial regulator.
The deal with the Securities and Exchange Commission (SEC) comes after an investigation into whether the bank breached securities rules.The deal with the Securities and Exchange Commission (SEC) comes after an investigation into whether the bank breached securities rules.
The SEC had looked at the sale and marketing of a bond often used by municipal authorities to raise funds.The SEC had looked at the sale and marketing of a bond often used by municipal authorities to raise funds.
It looked into whether the bank mis-stated the risk of the securities.It looked into whether the bank mis-stated the risk of the securities.
The SEC said Citigroup had failed to inform customers of the true risks involved in auction-rate securities.The SEC said Citigroup had failed to inform customers of the true risks involved in auction-rate securities.
It is just another problem for Citigroup, which is trying to recover after writing off billions of dollars as a result of the US sub-prime crisis.It is just another problem for Citigroup, which is trying to recover after writing off billions of dollars as a result of the US sub-prime crisis.
'Deceptive behaviour''Deceptive behaviour'
Citigroup marketed and sold auction-rate securities as safe, cash-equivalent products, when in fact they faced increasing liquidity risk.Citigroup marketed and sold auction-rate securities as safe, cash-equivalent products, when in fact they faced increasing liquidity risk.
New York State Attorney General Andrew Cuomo said the agreement was a turning point for investors seeking relief from the collapse of the auction-rate securities market.New York State Attorney General Andrew Cuomo said the agreement was a turning point for investors seeking relief from the collapse of the auction-rate securities market.
This is not just a Wall Street issue, this is a Main Street issue New York State Attorney General Andrew CuomoThis is not just a Wall Street issue, this is a Main Street issue New York State Attorney General Andrew Cuomo
“Today’s settlement sends a resounding message to the entire auction-rate securities industry," said Mr Cuomo.“Today’s settlement sends a resounding message to the entire auction-rate securities industry," said Mr Cuomo.
"This type of deceptive behaviour will not be tolerated and we will actively seek justice on behalf of investors in auction rate securities."This type of deceptive behaviour will not be tolerated and we will actively seek justice on behalf of investors in auction rate securities.
“Our goal is simple: to get investors back their money, and that’s exactly what this deal does.”“Our goal is simple: to get investors back their money, and that’s exactly what this deal does.”
Citigroup agreed to buy back all illiquid auction-rate securities at face value from all retail customers, charities and small-to-mid-sized businesses, by 5 November.Citigroup agreed to buy back all illiquid auction-rate securities at face value from all retail customers, charities and small-to-mid-sized businesses, by 5 November.
These customers, who number approximately 40,000 nationwide, have been unable to sell their securities since 12 February.These customers, who number approximately 40,000 nationwide, have been unable to sell their securities since 12 February.
Their securities are worth more than $7bn (£3.6bn).Their securities are worth more than $7bn (£3.6bn).
'Justice for consumers''Justice for consumers'
The bank also agreed to fully reimburse all investors who sold their auction-rate debt at a loss.The bank also agreed to fully reimburse all investors who sold their auction-rate debt at a loss.
Citigroup will pay a $50m penalty to New York and another $50m to the North American Securities Administrators Association.Citigroup will pay a $50m penalty to New York and another $50m to the North American Securities Administrators Association.
"This is not just a Wall Street issue, this is a Main Street issue," Mr Cuomo said."This is not just a Wall Street issue, this is a Main Street issue," Mr Cuomo said.
He said the settlement "will help restore confidence in this market" and added, "It does justice for consumers."He said the settlement "will help restore confidence in this market" and added, "It does justice for consumers."
Subpoenas
Meanwhile, also on Thursday, Bank of America said it had received subpoenas and requests for information from various state and federal regulators regarding its sale of auction-rate securities.
In a filing with the SEC it said subsidiaries Banc of America Investment Services and Banc of America Securities LLC are cooperating fully with the requests.
It said it received subpoenas, interrogatories or civil investigative demands from a number of state attorneys general regarding municipal derivatives transactions from 1992 to the present.
Separately it said Countrywide Financial, the mortgage firm itbought last month, has responded to subpoenas from the SEC and faces a formal investigation