Thursday, October 20, 2011

Citigroup to Pay Millions to Close Fraud Complaint

Citigroup is one of those financial groups that GOP Presidential candidate Herman Cain says is NOT responsible for the financial chaos that crushed the savings of many Americans. Cain points his finger at the Federal Government, but in truth, there is enough blame to throw around at the Feds AND at the financial sector. Both had a hand in creating the worst U.S. economy quite possibly since the Great Depression, when the bottom fell out of Wall Street in 1929 and which led to many lean years and massive unemployment for Americans.

An article in today's The New York Times reveals:

Citigroup to Pay Millions to Close Fraud Complaint

Published October 19, 2011


WASHINGTON — As the housing market began its collapse, Wall Street firms and sophisticated investors searched for ways to profit. Some of them found an easy method: Stuff a portfolio with risky mortgage-related investments, sell it to unsuspecting customers and bet against it.

Citigroup on Wednesday agreed to pay $285 million to settle a civil complaint by the Securities and Exchange Commission that it had defrauded investors who bought just such a deal. The transaction involved a $1 billion portfolio of mortgage-related investments, many of which were handpicked for the portfolio by Citigroup without telling investors of its role or that it had made bets that the investments would fall in value.

In the four years since the housing market began its steady descent, securities regulators have settled only two cases related to the financial crisis for a larger sum of money. This is also the third case brought by the S.E.C. accusing a major Wall Street institution of misleading customers about who was putting together a security and about their motive. Goldman Sachs and JPMorgan Chase & Company both settled similar cases last year.

Read the entire article

Despite the fact that Citicorp is paying out millions to close out the fraud complaint the company has made millions more and along with other financial concerns, like Goldman Sachs and JP Morgan are still reaping huge record profits and highlights why large companies should NOT be totally deregulated as is proposed by ALL of the GOP Presidential candidates.


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