Congratulations SEC… The SEC reached a tentative deal where Citigroup is held completely liable for the mismarketing of Auction Rate Securities. This means Citigroup is giving up any ability to debate their penalty or costs. In specific Citigroup will neither admit nor deny breaking any security laws. Citigroup is going to have to pay monies to holders of these auction rate securities that were hurt. In questioning this will amount to around 7.5 billion auction rate securities. From a shareholder perspective you could argue Citigroup gave up too easy and will now have its bottom line hurt.
I want to congratulate Citi and the SEC for coming together quickly with a tentative agreement. I think both parties did this to get the ball rolling, and during questioning that impression was confirmed. From a market stability perspective this is very important. The SEC would not comment on whom else they are investigating, but did say *several*, maybe more cases are open. They did say Citigroup represents 20% of the auction rate security market, meaning 80% of the auction rate security market is still open. Does this mean all 80% of the market is liable? No idea, but if I were UBS I would be very nervous right now. First UBS has tax problems, and now they are going to have auction rate security problems.