Friday, April 22, 2011

Citigroup Shareholder's Lawsuit Demands Directors To 'Ante Up' In Connection w/ Sloppy Mortgage & F'closure Practices; Robosigning, Putback Litigation

Reuters reports:
  • The board of Citigroup Inc was sued by an individual shareholder for the damage done to the bank by years of shoddy mortgage and foreclosure practices, which recently led to a costly fix agreed with regulators.
  • The lawsuit, filed on Wednesday in New York federal court, seeks to recover the spiraling costs stemming from numerous housing-related legal battles, from "robo-signing" lawsuits to "putback" litigation.

***

  • The lawsuit by Michael Brautigam, who according to court papers owns 380 shares of Citigroup, notes that the directors did not contribute any money as part of a recent agreement with the regulators. The agreement required 14 financial institutions to overhaul mortgage operations and to compensate borrowers who were wrongly foreclosed upon. Costs are expected to run into the billions of dollars, and financial penalties are still to be decided.
  • The lawsuit said that the current board, as well as four former directors including former U.S. Treasury Secretary Robert Rubin, breached their fiduciary duty to shareholders by failing to properly oversee the country's third-largest bank.

For the story, see Investor sues Citi board over shoddy mortgage ops (Shareholder wants board to pay for damage to company; Cites cost of poor oversight of mortgage activities; Seeks to tighten internal controls).

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