Rumors swirl that Robert Rubin, the Clinton-era Treasury chief who as a director at Citigroup is credited with the bank’s move into higher-risk investments, will step down. CNBC cited Wall Street sources, which a Rubin spokesman denied.
Meanwhile, the New York Post reports that a federal lawsuit against Rubin and former Citi CEO Chuck Prince accuses the two of orchestrating nothing less than a Ponzi-style scheme to defraud shareholders.
The lawsuit alleges Rubin and Prince took on trillions in collateralized toxic debt and then, failing to sell them to outside investors, forced them on Citi itself. Then, shareholders argue, senior executives cashed out tens of millions in stock in advance of a coming stock collapse which wiped out tens of billions in shareholder value.
Revelations of the exposure decimated Citi stock, which has lost 75 percent of its value since the beginning of 2008. Citi trades now at $7.40. It began the year at almost $30 and in recent years traded as high as $55 a share.
The complaint also names Vice Chairman Lewis Kaden, ex-CFO Sallie Krawcheck (who has since departed the firm), and her successor CFO Gary Crittenden, reported the Post.
Citi denied the allegations.
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