Pension Plan Sues Citigroup for $9 Billion

MANHATTAN (CN) - Citigroup used misrepresentations to sell billions of dollars of euro notes, whose value plummeted during the financial crisis, a United Kingdom-based pension company claims in a federal class action.

Rentokil-Initial Pension Scheme sued Citigroup and four of its top officers - Sanford Weill, Charles Prince, Robert Rubin and Vikram Pandit - on behalf everyone who bought euro notes from Citigroup between Oct. 12, 2005 and Feb. 25, 2009.

Citigroup peddled the euro notes with prospectuses that underestimated the bank's exposure to toxic mortgage-backed securities, and falsely claimed to be "well capitalized," the pension fund claims.

The lawsuit does not allege securities fraud.

It seeks damages under the United Kingdom's Financial Services and Markets Act 2000, or FSMA.

"Section 90 of the FMSA is a strict liability statute," the complaint states. "Plaintiff specifically disclaims any allegations of fraud or reckless wrongdoing."

Citigroup has been sued several times on claims that it misled investors about collateralized debt obligations tied to the U.S. housing market.

In one complaint, the SEC claimed that Citigroup sold $1 billion in mortgage-backed CDOs, which its trader called "a collection of dogsh!t," while secretly shorting the securities.

Regulators let the bank settle for $285 million without admitting wrongdoing.

The U.K.-based pension demands about $9 billion in damages for Citigroup's alleged misrepresentations of its financial health.

"As investors learned in early 2009 that Citigroup was essentially insolvent, the Euro Notes lost approximately $9 billion in value, or approximately 30 percent," the complaint states.

The class seeks compensatory damages.

It is represented by Samuel Rudman with Robbins Geller Rudman & Dowd.

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