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Case ID: 5072 | Stocks | 07/17/2008
According to a press release dated March 27, 2008, the Complaint alleges that Citigroup violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by deceiving investors about the investment characteristics of auction rate securities and the auction market in which these securities traded. Auction rate securities are either municipal or corporate debt securities or preferred stocks which pay interest at rates set at periodic "auctions." Auction rate securities generally have long-term maturities or no maturity dates.
The Complaint alleges that, pursuant to uniform sales materials and top-down management directives, Citigroup offered and sold auction rate securities to the public as highly liquid cash-management vehicles and as suitable alternatives to money market mutual funds. According to the Complaint, holders of auction rate securities sold by Citigroup and other broker-dealers have been unable to liquidate their positions in these securities following the decision on February 13, 2008 of all major broker-dealers including Citigroup to "withdraw their support" for the periodic auctions at which the interest rates paid on auction rates securities are set. The Complaint alleges that Citigroup failed to disclose the following material facts about the auction rate securities it sold to the class: (1) the auction rate securities were not cash alternatives, like money market funds, but were instead, complex, long-term financial instruments with 30 year maturity dates, or longer; (2) the auction rate securities were only liquid at the time of sale because Citigroup and other broker-dealers were artificially supporting and manipulating the auction rate market to maintain the appearance of liquidity and stability; (3) Citigroup and other broker-dealers routinely intervened in auctions for their own benefit, to set rates and prevent all-hold auctions and failed auctions; and (4) Citigroup continued to market auction rate securities as liquid investments after it had determined that it and other broker dealers were likely to withdraw their support for the periodic auctions and that a "freeze" of the market for auction rate securities would result.
At Lawcash.com, it is our goal to keep you informed about important legal cases, class actions and settlements. Our lawyers offer free legal evaluations in tort cases, class actions, personal injury, and other lawsuits because we are dedicated to helping you resolve your legal complaints. Other Stocks Cases of Interest Several class actions have been filed against non-hazardous waste disposal company Allied Waste Industries, Inc. (NYSE:AW) and certain of its officers and directors by stockholders who purchased the company's common stock between February 10, 2004, and July 27, 2004. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. A class action has been filed against Exide Technologies (NasdaqNM:XIDE), certain of its officers and directors by stockholders who purchased the company's common stock between November 16, 2004 and May 17, 2005. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. A class action has been filed in the District Court of Maryland against RS Diversified Growth Fund, et al and certain of its officers and directors by stockholders who purchased the company’s common stock between October 6, 1999 and October 5, 2004. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company’s securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. A class action has been filed against Tower Automotive, Inc. (NYSE:TWR), and certain of its officers and directors by stockholders who purchased the company's common stock between February 14, 2003 and January 21, 2005. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. A class action has been filed in the Northern District Court of California against Utstarcom, Inc. (NASDAQ: UTSI), a California based communications services company, and certain of its officers and directors by stockholders who purchased the company's common stock between April 16, 2003 and September 20, 2004. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. A class action has been filed against Astea International Inc. (ATEA), certain of its officers and directors by stockholders who purchased the company's common stock between May 11, 2005 and March 31, 2006. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. |
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