US Securities Investigation Anticipated
Citigroup, the parent company of Citibank, is expected to face an investigation by the United States finance regulator over possible breaches of securities law.
The problem stems from the promotion of something called auction rate securities. These are bonds which authorities use when aiming to raise funds and, because of their status the authorities seek out minimum risk investments. The question is whether Citibank misrepresented the real risks of the bonds they were offering, promoting them as safer than they actually are.
At the time of writing Citibank had made no comment on the risk profile of the auction rate securities they were offering though they have released a statement in which they make clear their full cooperation is being given to the investigation.