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Citigroup Inc. (C), ranked third by assets among U.S. banks, received inquiries from state attorneys general as part of an international probe into rigging of a key benchmark used to set loan rates.
In connection with investigations into “various interbank offered rates, certain Citigroup subsidiaries (C) have received additional requests for information and documents from various U.S. and non-U.S. governmental agencies, including the offices of the New York and Connecticut Attorneys General,” the company said today in a quarterly filing.
Regulators have queried at least a dozen banks worldwide about their roles in setting the London interbank offered rate, or Libor, the most widely used benchmark for interest rates, affecting more than $360 trillion in financial products. U.S. prosecutors are preparing to file charges later this year against traders from banks involved in a bid-rigging scheme to manipulate Libor, a person with knowledge of the case has said.
Firms involved in setting Libor face mounting legal claims. Berkshire Bank, a New York lender with 11 branches, sued 21 banks including Bank of America (BAC), Barclays Plc (BARC) and Citigroup for damages, alleging that Libor fraud lowered interest payments it received. Barclays Chief Executive Officer Robert Diamond stepped down last month after his firm was fined a record 290 million pounds ($454 million) for rigging the rate.
New York Attorney General Eric Schneiderman also served a subpoena on a Citigroup affiliate in June, seeking information about the firm’s MAT, ASTA and Falcon alternative-investment funds, according to the filing. Massachusetts Attorney General Martha Coakley served a “Civil Investigative Demand” on an affiliate this month seeking similar documents and information, the bank said.
The Securities and Exchange Commission is probing how the bank managed and marketed the MAT, ASTA and Falcon funds, which invest in debt, Citigroup said in an annual filing in February. The funds suffered “substantial losses” during the credit crisis, the firm said.
The Financial Industry Regulatory Authority ordered the lender to pay at least $60 million to some investors in the MAT and ASTA funds, who said that Citigroup pitched them a safe, more profitable alternative to other fixed-income investments.
Mark Costiglio, a spokesman for Citigroup, declined to comment beyond the filing.
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