Citigroup Shakeup Never Comes

Richard Bove, analyst at Rochdale Securities, thinks the public nature of the report could actually further entrench the executives, since they could sue Citi for defaming them by allowing the report to become public.

"It subjected them to public humiliation, and it focused the anger that would be directed to Citigroup normally on these three people," Bove says.

Pearl Zuchlewski, employment lawyer and partner at Kraus & Zuchlewski, says New York laws strongly favor employers, which would make a defamation case difficult to bring. The employees would have to prove Citi was intentially malicious in its treatment of the executives, she says.

Also, the executives might not want to bring a suit as it would raise details about how they were evaluated that could become public, according to Jeffrey Liddle, partner at Liddle & Robinson.

Liddle sees a potential problem for Citigroup with its shareholders, however, if it accepts the findings of the report and does not act on them.

Citi shareholders have reason to be grumpy once again. Though the stock has outperformed competitors like Bank of America (BAC) JPMorgan Chase (JPM) Bank of New York Mellon (BK) Goldman Sachs (GS) and U.S. Bancorp (USB) over the last three months, it has been one of the worst performers since October 14, falling nearly 20% since that date.

-- Written by Dan Freed in New York.

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