Subprime Mortgage Case Dismissed Against Citigroup Directors
After Citigroup lost billions of dollars from its investments in mortgages and mortgage-related securities, shareholders brought suit in federal district court in New York against a number of Citigroup's current and former officers and directors. The complaint claimed that the defendants faced liability for (1) "allowing" Citigroup to invest in subprime mortgages, (2) failing to disclose the extent of Citigroup's investment in subprime mortgages, (3) approving a stock repurchase plan, (4) committing securities fraud, and (5) engaging in insider trading or allowing others to engage in insider trading.
Manhattan Federal District Court Judge Sidney H. Stein has dismissed the consolidated action, ruling that “[n]one of those claims succeeds.”
In the memoranda of law the plaintiffs filed in opposition to the defendants' motion to dismiss, the plaintiffs requested leave to amend the complaint in the event that the defendants' motion was granted. Judge Stein ruled, however, that the plaintiffs failed to set forth any additional facts justifying amendment. He concluded that if the plaintiffs intended to amend the complaint, they would have to move for leave to amend the complaint and specify in detail how additional facts would cure the defects in the existing complaint.
That very well may end this case, for all intents and purposes.
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