SAN DIEGO (CN) – Citigroup employees who participated in the company’s stock-purchase plan say Citigroup hid its exposure to toxic subprime-related assets, including $43 billion in credit derivative products, and “recklessly invested good dollars after bad.”
Through the company’s Voluntary FA Capital Accumulation Program, employees could invest up to 25 percent of their paychecks in company stock. But because Citigroup issued misleading financial statements, the federal class action claims, employees bought the securities at artificially high prices.
“While many financial institutions have suffered in connection with subprime and other housing-related issues recently,” the lawsuit claims, “Citigroup stands atop the pile as the financial institution that has experienced the greatest losses.”
By mid-March 2008, Citigroup was forced to write down the value of its assets by more than $20 billion. A year later, Citigroup accepted $45 billion in federal bailout money.
The plaintiffs say they would not have participated in the plan had they known the extent of Citigroup’s financial troubles.
Lead counsel is James Clapp with Dostart Clapp Gordon & Coveney.