Citigroup in negotiations related to ARS

Citigroup is negotiating with regulators to buy back $5 billion in illiquid auction rate securities from investors and pay a fine of as much as $100 million.

Citigroup Inc. is in negotiations with federal and state regulators to buy back $5 billion in illiquid auction rate securities from investors and pay a fine of as much as $100 million.
According to a report in today’s Wall Street Journal, Citigroup has been in talks with New York Attorney General Andrew Cuomo’s office, other state security regulators and the Securities and Exchange Commission.
Citigroup of New York allegedly defrauded investors when it misrepresented information about the securities while underwriting, distributing and selling auction rate securities, according to a letter that Mr. Cuomo sent to the company Aug.1. The letter followed a five-month investigation by his office.
Mr. Cuomo’s office won’t sue the bank if his terms, including a fine, are met, said Alex Detrick, a spokesmanfor the attorney general.
The move comes as another blow to Citigroup, which has already confronted calls for its breakup, the shuttering of chief executive Vikram Pandit’s hedge fund and large writedowns.