Berko: Citigroup and lawyers
Friday, July 19, 2013 7:00 AM
Dear Mr. Berko:
Back in late 2007, I invested $9,000 and bought 100 shares of the Citigroup Capital 6.829 percent enhanced trust-preferred security, and in mid-2008, I invested $7,000 and bought 100 shares of the same Citigroup preferred stock. My cost was $16,000, and I got good interest and a big profit when the shares came due. A few weeks ago, I got papers from the federal court in New York saying that a bunch of lawyers sued Citigroup and that I’m entitled to a cash settlement if I complete and return pages of complicated forms. Why was Citigroup sued by these lawyers? I don’t understand those complicated forms, and they also want the date I purchased those shares, including my price. My broker won’t complete the forms for me. He doesn’t have the time, and he said the amount of money I would get is small and isn’t worth his time or my time. So I took these papers to a lawyer. He says that he would charge me $350 (I have to pay him now) and that I would get $650 ($3.25 a share) back if he filled out the papers. I told him to do it and gave him a check. Now he needs proof that I owned these stocks and to know when I bought them. So I called the broker, and his firm wants to charge me $100 to get this documentation from its archives in New York. After all of this work, I come out with $200, which doesn’t seem fair to me. Is there a better or cheaper way to do this? I feel I’m being ripped off.
H.B., Vancouver, Wash.
You are being ripped off, and your lawyer is a bozo. This idiot ought to be debarred, flogged and sentenced to six years in the French Foreign Legion. I admit that the “proof of claim and release” form you received is a perversely complicated mess, but that’s not reason enough for this three-bit barrister to give you incorrect information. I won’t begrudge him a $350 fee for completing eight pages of incomprehensible trash designed by a coven of heathenish New York lawyers to be abstruse. However, I’d like to poke your lawyer in the eye with a sharp stick for giving you incorrect information. You’re not entitled to $3.25 a share. Rather, you are entitled to receive 55 cents a share, or $110. The $3.25-per-share settlement represents only the Citigroup notes. You owned an enhanced trust-preferred security, which Citigroup, in its effort at simplification, calls E-TRUPS.
Citigroup was sued by the New York legal mafia, a cozening coven of rapacious attorneys who parade as legal ombudsmen and pretend to protect the public interest. And in the process, they persuaded the U.S. District Court for the Southern District of New York to fine Citigroup $730 million. These lawyers made a deal not to sue the responsible individuals (Citigroup executives) whose protected and closed-door testimony convicted the corporate structure. The lawyer’s share of this Golconda comes to 20 percent, which is not bad for two years of thousand-page briefs, legal parsing and professional sacrilege. The lawyers claimed that under the Securities Exchange Act of 1934, Citigroup made untrue statements and omitted important facts in its registration of various securities. And I’m sure it did, because Citigroup is a thousand furlongs from a model corporate citizen, and management’s disdain for consumers, depositors, mortgagors and small business people is palpable. Still, you came out as glorious as a Sonja rose, earning a 9 percent return for several years, plus a sweet $6,000 gain when the shares were called at $1,142 each. The guilty (a covey of highly paid Citigroup executives who giggled and then banked millions in bonuses) were not punished, so they’re encouraged to do it again at other major New York banks. They, not Citigroup, should be held responsible. Meanwhile, brokerages, like the airlines and banks, are searching for ways to increase profits. Most brokerages now charge you a fee if you close your account.
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