(September 27, 2010) — Norway’s central bank, which manages one of the largest sovereign wealth funds on the planet, Norway’s $473 billion Government Pension Fund, has sued Citigroup and its executives for losses.
Norway’s central bank sued Citigroup as well as 20 current and former Citigroup executives and directors, including the current chief executive, Vikram Pandit, and his predecessor, Charles Prince, over $835 million in losses in Citigroup stock and bonds. According to the complaint posted by the New York Times’ Dealbook, Citigroup misrepresented its financial condition and failed to disclose material information. The suit, filed on September 17 in United States District Court in Manhattan, accuses Citi of making “repeated material untrue statements and non-disclosure of material information to investors” between January 19, 2007 and January 15, 2009 that caused Norges Bank to purchase the securities at inflated prices.
The lawsuit is the latest in a string of legal actions against New York-based Citigroup and other large US institutions from investors who lost money in the financial crisis. Last year, for example, the Abu Dhabi Investment Authority (ADIA) filed an arbitration against Citigroup, accusing the US bank of misleading the fund when it invested more than $7.5 billion in 2007.
“Citi’s near-demise had its genesis in the company’s increasing willingness to take on risk for the sake of profit, without regard for — and without disclosing — the magnitude of the downside exposure it faced if those risks materialized,” the bank said in the complaint.
Citi denied the allegations. “We believe the suit has no merit and will defend ourselves vigorously,” a Citigroup spokeswoman said in a statement.
The Norwegian fund, into which the country invests its oil wealth for future generations, lost 23% of its value in 2008 as global markets tumbled. However, it has since recovered most of its losses.
To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:email@example.com'>firstname.lastname@example.org</a>; 646-308-2742