The Securities and Exchange Commission has filed a lawsuit against a former director in Citigroup’s structured credit products group Brian Stoker, over $1bn collateralized debt obligation defraud case.
The US watchdog accused the banker for misleading the investors when he sold them collateralized debt obligation dubbed as Class V Funding III, which comprised securities tied to home mortgages, at the beginning of financial crisis, as reported by the Financial Times.
The SEC claimed that the banker was slipshod by failing to tell buyers that Citigroup had selected some of the assets and placed a $500m bet against them.
The SEC is under intense pressure to hold individuals accountable for defraud and to seek disgorgement of profits and penalties from Stoker.
Without admitting or denying wrongdoing, Citigroup has agreed to pay $285m in order to settle the law suite, but the judge has not approved the pact.