The Securities and Exchange Commission should probe former Citigroup CEO Vikram Pandit's surprise resignation to determine if any wrongdoings occurred, said the commission's former chairman, Harvey Pitt.
Pandit released third quarter earnings on a Monday and then quit on a Tuesday, though the bank said his departure was voluntary, which raises red flags.
While Pandit said he resigned on his own, the timing suggests otherwise to many, which could be construed as misleading investors, especially in light of talk the board reportedly differed with Pandit and the bank's chief operating officer John Havens over strategy and operational issues. Havens stepped down as well.
Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.
"There are some serious problems here. When Citigroup went out with its announcement of results, they either knew or should have known what was coming next, unless this was purely a surprise move by Mr. Pandit, and it doesn't appear it was." Pitt told CNBC
"Second, I think the board itself and the company said this was a voluntary decision. It appears that that is inaccurate, and that is a very troublesome affirmative statement. It confuses the marketplace, and that's what the securities laws are designed to prevent."
Therefore, a probe should be underway soon.
"I think this is something the S.E.C. needs to investigate," Pitt said.
"Companies are required to get their disclosures right, and they are required not to mislead investors. Having two separate announcements plus an affirmative statement that the resignation was voluntary, if that is, in fact, not correct, would appear to create violations of the federal securities laws."
The resignation reflects the challenges big Wall Street banks face as they try to deal with a post-recession world.
"It is a black eye for Wall Street," said Michael Mayo, an analyst at CLSA in New York, according to the Los Angeles Times.
"It's definitely another dysfunctional event on Wall Street that will loom large in the mind of the person on the street."
Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.
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