WILMINGTON (Delaware) (Reuters) - the Board of Directors of Citigroup Inc. (c.n.r.) was sued by an individual shareholder for the damage caused to the Bank by years of poor quality mortgage and the practices of foreclosure, which has recently led to a costly correction agreed with regulators.
The complaint, filed Wednesday in Federal Court in New York, seeks to recover the spiraling costs arising out of many housing-related legal battles, prosecution "robo-signature" disputes "putback".
"We believe that the combination is groundless and will defend vigorously against it," said a statement by Citigroup.
The prosecution by Michael Brautigam, who, according to court documents, is the owner of 380 shares of Citigroup, pointed out that administrators have not contributed money under a recent agreement with regulators.
The agreement required 14 financial institutions for the revision of mortgage operations and to compensate the borrowers that have been seized on. Expenses should run in the billions of dollars, and financial penalties must still be resolved.
The prosecution said that the current Board, and four former directors, including former US Treasury Secretary Robert Rubin, breached their fiduciary to shareholders by failing to properly oversee the third Bank of the country.
"They do not have to implement and maintain adequate internal controls to manage foreseeable huge financial benefits from the inadequate residential mortgage loan underwriting standards," the complaint said.
In addition to seeking to recover the costs of poor supervision of the defendants, the prosecution is seeking corporate governance reforms.
Of the resolutions of the shareholders which would allow the removal of directors who has breached their fiduciary duty, as well as proposals to tighten la surveillance of the foreclosure proceedings.
Citigroup said that he has worked since 2007 to tighten its internal controls and processes related to the mortgage of maintenance and seizures, including the addition of staff and increasing training.
The Bank is already facing a series of disputes arising from the financial crisis in 2008 and the crash of real estate in the United States. Prosecution include class actions by shareholders and disputes "putback" by purchasers of mortgage-backed securities now virtually no value which have been packaged by the Bank.
The case is Michael Brautigam v Robert Rubin et al., Court of District of United States, Southern District of New York, no. 11-2693.
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