During a conference call to discuss Citigroup's better-than-expected first-quarter results, Gerspach, while not offering much detail, felt the need to address what surely would otherwise have been brought up by analysts in the question-and-answer session following his remarks.
"Citigroup is not involved in the matter that the SEC announced on Friday," Gerspach said. "It has been widely reported that the SEC, among other regulators, is conducting an industry-wide investigation into a wide range of subprime-related issues. As we disclosed in our 10k, we are fully cooperating with these investigations and it would not be appropriate for us to comment further."
In its annual filing for fiscal 2009, which was filed in late February, Citigroup said that, beginning in November 2007, it and related parties have been named as defendants in "numerous legal actions and other proceedings brought by Citigroup shareholders, investors, counterparties and others concerning Citigroup's activities relating to subprime mortgages, including Citigroup's exposure to collateralized debt obligations (CDOs), mortgage-backed securities (MBS), and structured investment vehicles (SIVs), Citigroup's underwriting activity for subprime mortgage lenders, and Citigroup's more general involvement in subprime- and credit-related activities."Friday's markets were rocked after the Securities and Exchange Commissionfiled civil charges against Goldman Sachs alleging that the investment firm had committed fraud related to certain collateralized debt obligations with subprime mortgages underlying the securities. The lawsuit sidelined the recent rally in the financial sector because of the possible reverberations for other firms. In light of a published report that Goldman had received a Wells notice -- essentially a precursor to a future SEC enforcement action -- eight months ago, Citigroup's Gerspach was asked by an analyst if the company was operating under any Wells notices, and he declined to comment. Citigroup's stock was rising 3% to $4.70 in the afternoon, on huge trading volume of more than 1.1 billion shares. Earlier in the session, the shares rose as high as $4.93, once getting within shouting distance of $5.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV