Participants in Citigroup’s 401(k) retirement plans are suing the company and others for sinking a large part of their funds into the company’s stock and allegedly causing them to lose more than $US1 billion (₤500,000).
The complaint charges the company; Chuck Prince, former chief executive officer; the plans’ administrative committee; and others with violating US federal pension law by allowing the ‘imprudent investment’ in Citigroup stock although they knew it was ‘unduly risky’ because of the company’s ‘serious mismanagement and improper business practices’, CFO.com reports.
A Securities and Exchange Commission filing yesterday shows USA’s biggest bank by assets, has funnelled $US7.6bn of emergency financing into the seven structured investment vehicles (SIVs) it runs after they were unable to repay maturing debts, drawing on $US10bn of so-called committed liquidity provided by Citigroup.
The bank may have to write down another $2.7 billion of sub-prime mortgage-backed and related securities, according to US credit researcher CreditSights Inc. Citigroup said three days ago that securities it held might have lost $US11 billion of value.
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