Belgian court fines Citibank over Lehman sales
A Belgian court fined Citibank 165,000 euros (216,000 dollars) on Wednesday after determining it used "false advertising" to sell Lehman Brothers investment products without warning clients of risks.
The court found that Citibank breached laws on commercial practices, having "minimised the risks" and having "led inexperienced investors to put money into the American bank."
The tribunal said Citibank did not stop selling the products even though Lehman's credit rating had been downgraded.
Citibank sold 128 million euros worth of Lehman Brothers bonds to some 4,100 clients in Belgium. These bonds became worthless after the collapse of Lehman, the trigger for the world's deepest downturn since the 1930s Depression, in September 2008.
In February, Citibank said more than 97 percent of these clients had accepted a settlement, some of whom took a 65 percent redemption on the spot rather than wait for a potentially a higher figure later.
For the remaining 120 or so clients who pursued the action, the court ordered Citibank to match the on-the-spot offer.
A spokesman for the bank told Belga news agency it would appeal.
Belgium's Federal Economy Minister Vincent Van Quickenborne said the verdict was an "unequivocal condemnation."
© 2010 AFP