Criminal action deserves criminal prosecution. This is nothing but a minor distraction for Citigroup.
NEW YORK, Jan 24 (Reuters) - Citigroup Inc was sued for fraud by Loreley Financing over nearly $1 billion worth of collateralized debt obligations purchased in 2006 and 2007.
Citigroup is accused of defrauding Loreley into purchasing "fraudulent investments that are now worthless," Loreley said in a complaint filed Tuesday in New York State Supreme Court in Manhattan.
Citi used the CDOs to offload the risks of toxic mortgage-backed securities on its books and to help preferred clients "short" the housing market, the lawsuit claims.
The case is Loreley Financing v. Citigroup Global Markets, 650212/2012, New York State Supreme Court.