In Citigroup Case, A Crack in Wall Street’s Defenses | Investors Awarded a Total of $54.1 Million in a Securities Arbitration Case

A Crack in Wall Street’s Defenses

TWO individual investors just scored a remarkable win against Citigroup.

A few weeks ago, the pair was awarded a total of $54.1 million in a securities arbitration case against the Smith Barney unit of the company — the largest amount ever awarded to individuals in such a case, according to the Financial Industry Regulatory Authority.

This legal dust-up involved supposedly conservative municipal bond investments that Smith Barney had peddled to its wealthiest clients. The investments, which were big money-makers for Smith Barney, turned out to be anything but safe for the firm’s clients: various portfolios lost between half and three-quarters of their value during the financial crisis.

Arbitrators rarely, if ever, discuss such cases, and the materials turned over by both sides are kept under wraps. But the outsize award, which included $17 million in punitive damages, is not the only thing that is noteworthy. The arbitrators appeared to reject — resoundingly — three defenses that Wall Street often employs when clients sue:

No. 1: We didn’t blow up your portfolio. The financial crisis did.

No. 2: If you’re wealthy and sophisticated, you should have understood the risks.

And, No. 3, the most common defense of all: The prospectus warned that you could lose your shirt, so don’t come crying to us if you do.

Check out the rest here…


3 Responses to “In Citigroup Case, A Crack in Wall Street’s Defenses | Investors Awarded a Total of $54.1 Million in a Securities Arbitration Case”
  1. l vent says:

    Well, when the criminals own and control their own ratings agencies there are no safe investments. Fannie/Freddie’s PHONY MBS’s they were peddlng to investors were AAA rated. These criminals were highly deceptive in what they were sellling. Just like all of the deception they used on Homeowners at the closing table, If they would have told us they were packaging our good loans up with thousands of bad loans that they were sure would default, would we have agreed to that? They always want to blame the victim for all of their rampant fraud and deception. If they can settle with investors to keep their asses out of court, then the same should go for the deceived homeowners who were INTENTIONALLY SET UP TO FAIL RESCIND OUR FAKE MORTGAGE CONTRACTS.

  2. Hydesdocs says:

    Remarkable, how the so called smart can make lots of money, but have no initiative or discernment when
    it comes to dealing with human nature. How come they didn’t take the time to research what they were being
    sold before committing themselves. Was it because they’d been a client of Smith Barney for so long they assumed they could trust them? My bet is they have no idea how much money they took from them, and will
    never know.

  3. Stupendous Man - Defender of Liberty - Foe of Tyranny says:

    The last lines of the article, quoting one of the prevailing litigants, says it as well as it can be said:

    “Instead of the financial world being the lubricant for business, they are out there manufacturing products with no utility whatsoever except for generating fees,” he said. “Somebody’s got to do something about Wall Street. It is destroying the country.”

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