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Banking

SEC enforcement chief accused of soft-pedaling Citi

The SEC’s enforcement chief Robert Khuzami is under investigation for allegedly giving preferential treatment to Citigroup in the settlement of a case related to its exposure to subprime mortgages.

For more on pending litigation in the structured finance market 
see Euromoney’s February 2011 issue. Subscribe now to access this information as soon as it is published.


The aggressive tone adopted by the SEC in its investigations into the CDO businesses of the major Wall Street banks has been hailed as evidence that the government aims to get tough with the banks over their behaviour during the excesses of the structured credit bubble. But that perception has now been called into question by the revelation on Monday that the SEC’s enforcement chief is now under internal investigation by its own watchdog for allegedly giving preferential treatment to Citigroup in the settlement of a case related to its exposure to subprime mortgages.


Robert Khuzami
Robert Khuzami
SEC enforcement director

Citigroup settled the case – brought by the SEC in July and relating to the bank’s understatement of its exposure to risky mortgages – for $75 million. But an anonymous letter sent to Senator Charles Grassley and Representative Darrell Issa this month claims that the SEC’s enforcement director Robert Khuzami had agreed to drop certain elements of the fraud charge against certain Citi employees in conversation with the bank’s defence lawyer, who was a “good friend” of his.



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