Citigroup latest target in auction suits

The investors bringing the suit claim that Citigroup had not disclosed the risks inherent in auction backed securities.

Citigroup has been hit by a lawsuit by two clients who accused the bank of improperly marketing auction backed securities as an alternative to cash, according to published reports.
Auction-backed securities are long-term bonds periodically revalued at auction, where the interest rates of the bonds change and investors have the option of selling.
The investors bringing the suit, which was filed yesterday, have claimed that Citigroup had not disclosed the risks inherent in auction backed securities.
They are also seeking class-action status for their lawsuit.
Citigroup is the latest target in a series of similar lawsuits.
On Tuesday, a client of financial giant Morgan Stanley brought similar charges against the company.
The company denied the allegations and stated that the problems facing the auction-backed securities market were industry-wide.
Lawsuits have also been leveled at Merrill Lynch, UBS, Ameritrade and Wachovia.