Report: Cuomo readies Citigroup charges

NEW YORK, Aug. 2 (UPI) -- The New York attorney general is preparing to file possible civil fraud charges against Citigroup Inc. in connection with auction-rate securities, sources say.

The Wall Street Journal, citing unnamed sources Saturday, said that unless Cuomo and Citigroup reach a settlement on the matter soon, the attorney general has threatened to pursue securities fraud actions against the financial services giant.

Citigroup is also dealing with another investigation related to auction-rate securities, this one from the U.S. Securities and Exchange Commission, which has subpoenaed documents from the bank, Citigroup revealed in a regulatory filing.

Cuomo's office, in a letter to Citigroup attorney Michael Sharp, said its five-month investigation showed the bank "committed fraud by making material misrepresentations and omissions" in its sale of the securities and demands that Citigroup buy back the securities at par and reimburse some investors for damages they have incurred, the Journal said.

If it faces civil charges, Citigroup would become the third big financial firm cited for auction-rate securities fraud.