Newly uncovered emails and documents from Citigroup (NYSE:C) that FOX Business has obtained reveal that Citi executives were in open insurrection against top management over risky, speculative investments that failed in spectacular fashion in early 2008, even though Citi’s sales force had touted them as plain-vanilla, safe funds to its richest clients. That means investors could not possibly know the risks involved because even Citi’s salespeople themselves did not have the complete picture.
The Citi emails provide a rare, and chilling, reminder that xecutives often tout and sell investments even they themselves don’t fully understand. Citi’s private bankers and financial advisors involved with the investments agreed that they should not have been sold, documents show.
Citi has steadfastly maintained it acted appropriately.
“Citi acted appropriately at all times in connection with these investments,” a spokesman for Citigroup tells FOX Business in a statement. “Our disclosures were accurate and complete and the investors who purchased these investments were highly sophisticated and knew of the risks involved.” The bank declined further comment.
But Citi is still battling an ongoing government inquiry, investor lawsuits as well as federal arbitration over these failed investments, which lost up to $2 billion in investors’ money on speculative investments on mostly muni bonds.
The investments at issue became nearly worthless, dropping a breathtaking 80% to 97% from 2007 to March 2008. More than 2,000 of the bank’s wealthiest clients lost the majority of their initial investment, court documents show.