Norges Bank, Norway's central bank, last week filed suit in District Court in Manhattan over $835 million in losses on Citi shares and bonds.  Citi is accused of making “repeated material untrue statements and non-disclosure of material information to investors” from 1/19/07 through 1/15/09 that caused Norges Bank to buy the securities at inflated prices.    

The complaint contends that, when the market slowly learned the truth of Citi’s financial condition, Citi came close to insolvency and Plaintiff lost a substantial amount of its investment.  Citi’s near-demise had its genesis in the Company’s increasing willingness to take on risks for the sake of profit, without regard for – and without disclosing – the magnitude of the downside exposure it faced if those risks materialized. 

    Players in the Complaint.   The complaint names 20 current and former Citigroup execs and directors, including the current CEO Vikram Pandit and former CEO Charles Prince.  A spokesperson for Citigroup said, “We believe the suit has no merit and will defend ourselves vigorously.”  Norges Bank is responsible for setting monetary policy in Norway, and it oversees the international investments of the Norwegian Government Pension Fund-Global - one of the largest sovereign wealth funds in the world.  Enriched by Norway’s oil and gas revenues, the fund has $443 billion in assets. 

Coincidentally or not, early in the financial crisis, 4 small Norwegian towns near the Arctic Circle made headlines after they lost $64mn on CDO's created by Citigroup and sold by a Norwegian brokerage firm.  

To access Norges Bank filing, click onto:   [ NYT Dealbook, 9/24 ]