The Securities and Exchange Commission’s Division of Enforcement, on 07 August, preliminary settled in principle with Citigroup Global Markets, Inc. (Citi) including proposed charges and a plan that would give individual investors, small businesses, and charities all $7.5 billion of their money back from auction rate securities (ARS) they purchased from the firm.
The agreement also would require Citi to use its efforts to liquidate by the end of 2009 all of the approximately $12 billion worth of ARS the firm sold to retirement plans and other institutional investors.
“Today’s agreement in principle provides real relief to investors,” says Linda Chatman Thomsen, Director of the SEC’s division of enforcement. “In a short period of time, about 38,000 individual, small business, and charitable organization investor accounts will receive nearly $7.5 billion in liquidity, and Citi will begin the process of restoring liquidity to over 2,600 institutional investors who hold approximately $12 billion in auction rate securities. This settlement in principle is an outstanding example of federal and state regulatory cooperation for the benefit of investors and markets.”
Citi will provide notice to all customers of the settlement terms and establish a telephone assistance line, with appropriate staffing, to respond to questions from customers concerning the terms of the settlement.
The Commission’s investigation is continuing as to individuals and other entities that participate in the auction rate securities market.