A lawsuit filed by South Korea-based Woori Bank - a unit of
Woori Finance Holdings Co. Ltd.
) - against
) was dismissed by a U.S. District judge in Manhattan. The
lawsuit was associated with Citi's sale of collateralized debt
obligations (CDOs) supported by risky mortgage-backed securities
(MBS) to Woori Bank prior to the 2008 financial crisis.
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The lawsuit accused Citi of creating and selling CDOs that
comprised mortgage-backed securities. Moreover, Woori alleged
that Citi issued misleading statements related to the credit
rating associated with these RMBS and had concealed the
associated risks. As a result, these induced investments. The
lawsuit sought damages worth $95 million.
However, the District Judge found the supporting evidence
presented by Woori to be weak, and hence ruled in favor of Citi.
However, the judge gave the South Korean bank permission to file
a revised complaint.
Similar to the dismissal of the abovementioned lawsuit, another
legal charge brought by Woori against
The Royal Bank of Scotland Group plc
) was rejected by a U.S. District judge in Manhattan in Dec 2012.
Earlier, in February this year, Woori suffered similar fate as a
U.S. District judge dismissed a lawsuit filed against Merrill
Lynch - a unit of
Bank of America Corporation
). The case against BofA was rescinded as it failed to meet the
3-year deadline of filing the lawsuit after incurring the losses
under the South Korean law. The District judge rejected the plea
even after Woori argued that the 3-year time period began
following the publication of a report by the U.S. Financial
Crisis Inquiry Commission on Jan 27, 2011.
As for Citi, the lawsuit brought some relief. The company has
been facing a string of lawsuits and investigations pertaining to
mortgage-backed securities, some of which were settled. Even
though the settlement of these charges was a burden on Citi's
expenses, but they reduced the company's litigation overhang to
Citi currently carries a Zacks Rank #3 (Hold).