Judge dismisses part of fraud case against Citi

Friday, September 30th, 2011 | Finance News

(Reuters) – A U.S. federal judge dismissed part of a case brought by European bond investors accusing Citigroup Inc (C.N) and its directors of misrepresenting or failing to disclose Citi's exposure to toxic mortgage assets and its own solvency.

The plaintiffs, including Norges Bank and Swiss & Global Asset Management AG, cannot sue Citi under the United Kingdom's Misrepresentation Act or the UK common law of deceit, because they have not shown that their purchases relied on Citi statements, ruled Judge Sidney Stein of the U.S. District Court for the Southern District of New York.

Plantiffs' fraud suits also cannot move forward under New York's common law, judge Stein said, because they have not shown actual reliance for misrepresentations and omissions.

The judge, in the September 30 ruling, said plaintiffs' claims over certain investments, can proceed under the UK Financial Services and Markets Act and under the U.S. Securities Act of 1933.

(Reporting by Nick Zieminski; Editing by Gary Hill)

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