Citi disclosed Friday in a 10-Q quarterly filing with the Securities and Exchange Commission that it has received subpoenas or requests for information from several self-regulatory agencies and federal authorities, including the SEC and state regulators in Texas, New York, and Massachusetts, which are all investigating the bank's auction-rate securities sales practices.
The firm said the SEC has issued a formal order of investigation into whether various provisions of the federal securities laws were violated in connection with the sale of auction-rate debt.
In a statement Friday, Citi declined to comment on its specific discussions with regulators. But Shannon Bell, deputy director for public affairs, said that "since the beginning of the auction-rate securities liquidity crisis, Citi has worked diligently to obtain liquidity for holders of illiquid ARS."
Officials declined to comment at the SEC, the Financial Industry Regulatory Authority, and all three states. SEC officials said in April that they were probing ARS sales in coordination with FINRA.
In April, the North American Securities Administrators Association formed an ARS task force to coordinate numerous state investigations of whether state securities laws were violated in connection with the offer and sale of the securities.
Last week, Massachusetts Secretary of the Commonwealth William Galvin filed suit against Merrill Lynch & Co. for aggressively selling auction-rate securities to investors while its sales and trading managers altered their research department's reporting on the ARS market to minimize the risks of the securities.
The suit came about a month after Galvin sued UBS Securities LLC and UBS Financial Services, alleging that the global head of the municipal securities group sold off his personal holdings of ARS even as he was responsible for creating a marketing campaign aimed at pitching the securities to retail investors. Galvin's office has said that it is also investigating Bank of America.
Martha Coakley, the state's attorney general, may be the state regulator investigating Citi, but her office declined to comment Friday.
New York Attorney General Andrew Cuomo has also filed charges against UBS while the Texas State Securities Board has called for a September hearing to consider revoking the bank's license in the state. Cuomo said through a spokesman Friday that he would soon file charges against Citi, claiming that the firm destroyed documents under subpoena.
