Skip to main navigationSkip to News Headlines
NJ Division of Consumer Affairs
Global Navigation
Division of Consumer Affairs
The State of New Jersey Office of The Attorney General (Dept. of Law & Public Safety) The State of New Jersey NJ Home Services A to Z Departments/Agencies OAG Frequently Asked Questions
OAG Home
OAG Contact
Division of Consumer Affairs Alerts and Recalls
Division of Consumer Affairs Alerts and Recalls
Office of the Attorney General Homepage Division of Consumer Affairs, Director
Division of Consumer Affairs, Director
Division of Alcoholic Beverage Control
Division of Consumer Affairs
Division of Consumer Affairs Highlights
Division of Consumer Affairs Topics in a A-Z List Format
Office of Consumer Protection (OCP)
New Jersey Bureau of Securities
Office of Weights and Measures
Legalized Games of Chance Control Commission
Alternative Dispute Resolution
Professions and Occupations List
Contact the Division of Consumer Affairs
Division of Consumer Affairs in Spanish
Division of Criminal Justice
Division on Civil Rights
Division of Gaming Enforcement
Division of Highway Traffic Safety
Division of Law
Juvenile Justice Commission
NJ Racing Commission
State Athletic Control Board
Division of NJ State Police
Victims of Crime Compensation Office
Subscribe to Buyer Beware Alerts
OPRA - Open Public Records Act
Download Free PDF Reader


Division of Consumer Affairs
Press Release

Attorney General
Anne Milgram
Division of Consumer Affairs, Director
David Szuchman
   
For Immediate Release:
May 20, 2009
For Further Information Contact:
Jeff Lamm, 973-504-6327
 
Citigroup Pays $3.3M to New Jersey Bureau of Securities
to Settle Auction Rate Securities Case

NEWARK – The Office of the Attorney General through its Bureau of Securities today signed a final Consent Order that requires Citigroup Global Markets Inc. to complete or confirm its repurchase of auction-rate securities (ARS) from New Jersey clients to settle allegations that the firm’s securities dealers failed to disclose risks of the ARS market.

Under this settlement, 2,873 individual investors in New Jersey as defined in the Consent Order are eligible to have $623.5 million in ARS repurchased.

“Citigroup’s New Jersey investors whose ARS investments were frozen during last year’s meltdown will now have free access to their funds, under terms of this settlement,” Attorney General Anne Milgram said. “Our Bureau of Securities worked with other state regulators to protect investors and safeguard their monies.”

Although marketed and sold to investors as safe, liquid, and cash-like investments, ARSs are actually long-term investments subject to a complex auction process that failed in early 2008, revealing illiquidity and lower interest rates than investors were promised.

“Our Bureau of Securities teamed up with other state regulators in a task force that combined and coordinated investigative resources,” said David Szuchman, Consumer Affairs Director. “New Jersey will continue to be a leader in protecting its investors.”

“From the first failed ARS, the Bureau of Securities has sought to secure much needed relief for investors stuck with these unsuitable and illiquid products,” said Marc B. Minor, New Jersey Bureau of Securities chief. “I am pleased that Citigroup has agreed to do what’s right by offering to repurchase clients’ positions, and I expect other firms that sold these securities in New Jersey to do the same.”

ARS settlements with other investment firms are currently being negotiated, Minor noted.

The order also requires Citigroup to pay a $3,300,932.67 civil penalty to New Jersey. This amount represents the state’s pro-rata share of a settlement negotiated by a multi-state task force of state regulators formed by the North American Securities Administrators Association (NASAA).

During the investigation, regulators discovered that Citigroup’s securities dealers failed to adequately inform customers and train employees on the risks associated with buying auction-rate securities.

The investigation into Citigroup’s role in the marketing of auction rate securities is part of a larger state-led effort to address problems in connection with ARS investments. Early in 2008, state offices began receiving complaints from investors throughout the country. As a result, in April, 12 states, including New Jersey, formed a task force to investigate whether the nation's prominent Wall Street firms had systematically misled investors when placing them in auction rate securities.

The Consent Order announced today sets forth the allegations by the BOS and the terms that were agreed to in principle in August, 2008.

BOS Investigating Attorney Peter C. Cole led New Jersey’s efforts in securing this settlement and protecting Garden State investors.

The Bureau of Securities can be contacted toll-free within New Jersey at 1-877-I-INVEST (1-877-446-8378) or from outside New Jersey at 973-504-3600. The Bureau's web site is located at http://www.njsecurities.gov.

Settlement Document

###

   
Contact Us | Privacy Notice | Legal Statement | Accessibility Statement
NJ Home Logo
Divisional: DCA Home | Complaint Forms | Proposals | Adoptions | Contact DCA
Departmental: OAG Home | Contact OAG | About OAG | OAG News | OAG FAQs
Statewide: NJ Home | Services A to Z | Departments/Agencies | FAQs
Copyright © State of New Jersey
This page is maintained by DCA. Comments/Questions: email

Page last modified: