3 p.m., April 29
Citigroup Employees in Company's Stock Plan Sue in District Court
Citigroup employees who participated in the ailing company's stock purchase plan filed a suit in district court yesterday (March 24), charging that the financial services firm concealed its exposure to toxic subprime-related and derivative products. The suit, filed by lead attorney James Clapp of Dostart Clapp Gordon & Coveney, seeks class action status. The lead plaintiffs are Daniel Brecher and Scott Short, both San Diego employees of Citigroup. The suit claims that employees of Citigroup and Smith Barney, its brokerage subsidiary, could invest 25 percent of pre-tax earned wages in the Voluntary FA Capital Accumulation Program. By the time the housing bubble burst, the equivalent of 43 percent of Citigroup equity was invested in subprime-related products, including $43 billion in derivatives, according to the suit.