Citi Defends Way it Warned of Writedowns

Citigroup (C Quote - Cramer on C - Stock Picks) on Friday defended its method of disclosing information about second-quarter results after an analyst characterized its CFO's statements on a conference call the previous day as "questionable and unacceptable."

CFO Gary Crittenden warned listeners to a conference call on Thursday that the bank would face further writedowns and credit losses during the second quarter. The call was hosted by Deutsche Bank(DB Quote - Cramer on DB - Stock Picks) analyst Michael Mayo and only Deutsche clients were able to pose questions.

Richard Bove, an analyst with Ladenburg Thalmann & Co., took issue with Citi's method of disclosure and implied that it might not comply with Securities and Exchange Commission's Regulation FD. That rule requires companies to distribute any "material nonpublic information" as soon as it's available, and to all investors rather than a select group, to prevent insider trading.

The event was preannounced in a press release, Webcast in real time and archived on Citi's investor site and did not apparently break any SEC rules, according to experts on Regulation FD and the bank itself.

Cramer: If I Were Citi's CEO

Still, Bove took issue with the way Citi distributed its press release, as well as the fact that participation in the call was limited to his competitor and Deutsche Bank's clients.

"The fashion by which the company made this information available is questionable and unacceptable to this analyst," Bove said in a note Friday morning. He later added, "Material information was made available, but it is open to question if it was made available in a fair and honest fashion to all investors. Perhaps SEC FD is dead. Shame on Citigroup."

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