Several executives of Indian American chief executive
Vikram Pandit-led Citigroup were in open insurrection against top management over risky, speculative investments that failed in spectacular fashion in early 2008, according to a media report.
Citi's own private bankers and financial advisors felt they themselves were duped by fellow workers about the riskiness of these investments,
Fox Business Network reported on Monday, citing newly uncovered emails and documents obtained by it.
Citigroup to cut 4,500 jobs amid 'tough times' These documents reveal that investors couldn't have known the risks they were taking when investing in Citigroup's speculative investments because the individuals peddling these products didn't even understand them, it said.
Private bankers and financial advisers who
invested clients' money in what were known as Falcon and ASTA/MAT funds believed that they were safe investments, according to various correspondence. It became clear that they were drastically misinformed after customers lost about $2 billion in what turned out to be speculative investments on mostly municipal bonds.
Citigroup revises India's 2011-12 growth forecast "The issue is that clients got duped, and we as FAs [financial advisers] got duped on what we were getting,"
Fox quotes one email as saying.
Fox also notes the documents show that Citi employees repeatedly told Citi's top executives, including new chief executive Pandit and Sallie Krawcheck, about problems even while the funds were melting down.
A Citigroup spokesman told Fox Business Network in a statement that Citi acted appropriately at all times in connection with these investments. "Our disclosures were accurate and complete and the investors who purchased these investments were highly sophisticated and knew of the risks involved."
Citigroup is already in trouble over peddling toxic debt via a product known as a CDO, or collateralized debt obligation, which was linked to US mortgages and which also went bust.
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