Citigroup sued over auction rate securities (risky securites pitched as "safe")

[UpInArms]

Source: Reuters

NEW YORK (Reuters) - Citigroup Inc (C.N: Quote, Profile, Research) was sued on Thursday by two clients accusing the financial institution of failing to properly disclose the risks of investing in auction rate securities.

The lawsuits, filed in U.S. District Court in Manhattan, seek class action status. They also accused the company of artificially supporting the auctions.

Auction rate securities are bonds that banks typically pitched as a safe alternative to cash. They are long-term securities, but the investment banks hold periodic auctions to set the interest rates, giving holders the option to sell their securities.

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"The collapse of the auction rate securities market ... was a direct result of defendants' unilateral decision to no longer artificially support the auction rate securities market," plaintiff Lisa Swanson, who purchased auction rate securities in 2006, claimed in one suit.

Read more: http://www.reuters.com/article/bondsNews/idUSN2741113720080327

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caught by their own manipulation of the markets - irony is dead - long live irony!