3 New Risks for Citigroup

NEW YORK (TheStreet) -- Citigroup(C) made a few new revelations in its annual filing with the Securities and Exchange Commission Friday.

Here's a quick rundown based on a quick read of the 10K.

1. We Got a Subpoena: Citigroup said it received a subpoena from the Civil Division of the U.S. Department of Justice on January 27 in connection with mortgage-backed securities issued, sponsored or underwritten by the bank.

Attorney General Eric Holder had said that the Justice Department had served 11 financial firms with subpoenas in the days leading up to the creation of the new Residential Mortgage Backed Securities Task Force under New York AG Eric Schneiderman.

The bank also said it has received other subpoenas from Federal and state regulators including the SEC on a "variety of aspects of Citigroup's mortgage origination and mortgage servicing practices, including with respect to ancillary insurance products or practices."

While the $26 billion national mortgage settlement on Feb.9 released Citi from a broad range of potential claims, the bank will not receive releases related to securitizations or whole loan sales, nor will it receive releases from criminal, tax, environmental, and certain other categories of liability, it said.

2. Repurchase Claims Jumped: Citigroup has become the target of law firm Gibbs and Bruns, which has representing large institutional investors in their repurchase claims over souring mortgage backed securities (MBS) issued by the big banks and was successful in extracting a $8.5 billion settlement from Bank of America(BAC) last June.

The bank said it originally received a letter in December from the Houston-based law firm, which said it represented clients holding 25% or more of the voting rights in 35 MBS trusts issued and or underwritten by Citi. The trusts have an aggregate outstanding balance in excess of $9 billion.

The letter alleged that certain mortgages placed in these trusts were sold based on misrepresentations by originators and sellers and that Citigroup improperly serviced the loans in those trusts. The letter threatened to instruct trustees of the trusts to assert claims against Citigroup based on these allegations, the bank said.

More recently, the law firm informed Citigroup that it now represents clients holding the requisite interest in 70 trusts, with an alleged total unpaid principal balance of $24 billion, for which Citi has repurchase obligations.