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Important Victory in New York!
On 10 August 2009, Terra Securities ASA's bankruptcy estate and the Municipalities of Bremanger, Hattfjelldal, Hemnes, Kvinesdal, Narvik, Rana and Vik initiated a law suit against Citigroup in New York. The law suit is based on a claim of violation of U.S. securities law in connection with the sale of securities to the municipalities through the securities broker (Terra) in the summer of 2007. The basis for the claims is material misrepresentations and omissions in the description of Citigroup's securities, which meant that they did not function as stated. The municipalities lost NOK 541 million on its investments. Based on the municipalities' losses, Terra Securities was notified that its brokerage license would be revoked. Consequently, the company filed for bankruptcy on 28 November 2007, and significant company value was lost. Terra Securities’ bankruptcy estate and the municipalities seek compensatory damages in excess of $ 200 million.
The complaint named Citigroup Inc. and its affiliates Citigroup Global Markets Inc. and Citigroup Alternative Investments LLC as defendants and was filed in the United States District Court for the Southern District of New York. The U.S. law firm Kasowitz, Benson, Torres & Friedman LLP represents the Terra Securities estate and the seven municipalities.
Last autumn, Citigroup filed a motion to dismiss the case claiming that the court lacked subject matter jurisdiction. Citigroup moreover claimed that New York was a not a convenient forum and that the case should be tried in England or Norway. This is the motion the court denied. To the contrary, in its ruling, the court stated that the essential core of alleged actions took place in the U.S.
- The consequence of yesterday's ruling is that the matter continues in the U.S. However, we are now entering into a new phase where we continue our preparations towards trial. At this time, it is impossible to estimate when trial will take place, says Terra Securities' trustee Jon Skjørshammer of the Selmer law firm.
Attorney Caroline Lund states on behalf of the municipalities that they are very pleased with the decision and look forward to having the case regarding Citigoup's fatal investment products illuminated in full in the courts.
For additional information, please contact:
Trustee and attorney Jon Skjørshammer
+47 23 11 65 00 / +47 922 20 007
E-mail : jsk@selmer.no
Attorney Michael Fay
E-mail: MFay@kasowitz.com
Read the New York Court's decision here
