The Greed goes on....
The real story here is how Citigroup is pretending to be mad about not getting Wachovia at a dollar a share as opposed to seven dollars a share. Now they just hope for the free payday.
Citigroup Drops Bid to Block Wachovia Sale, Presses Ahead With $60 Billion Suit for Damages
By Mark Hamblett
October 14, 2008
Citigroup, Inc. may have abandoned its attempt to purchase the assets of Wachovia Corp. but continues to pursue its claim for $60 billion in damages.The focus in the latest manuevering was whether those claims belonged in federal or state court.Citigroup no longer is seeking to block the acquisition of Wachovia by Wells Fargo for $15 billion but insisted in a statement Thursday that "it has strong legal claims against Wachovia, Wells Fargo and their officers, directors, advisers and others for breach of contract and for tortious interference with contract" and that it "plans to pursue these damage claims vigorously."Wachovia filed notice of removal of Citigroup's state suit Friday. Southern District Judge Lewis Kaplan will now hear Citigroup's argument for an order of remand.Judge Kaplan conducted a telephone conference with the three parties Friday morning. He said that he did not see any reason to hold an immediate hearing but indicated that "Monday is a possibility."Judge Kaplan instructed the parties to send him certified copies of all papers filed with New York State Supreme Court Justice Charles Ramos (See Profile) in Citigroup's lawsuit. Justice Ramos has scheduled a hearing for Tuesday on the suit."I want to understand where things stand, and most particularly whether there is any great urgency, given the developments in the commercial sphere," Judge Kaplan said, according to a transcript from the teleconference. "As I understand it, regardless of the sequence of events last night, Citigroup has put out a press release saying that they have basically withdrawn from the field of battle, they are no longer seeking to block the Wells Fargo merger, and that they will pursue their remedies, such as they may be, at law."Gregory Joseph, representing Citigroup, confirmed for the judge that Citigroup's action was now just one for damages and that it was no longer seeking to block the deal."We can deal with this in normal, methodical fashion, which will include addressing the threshold issues about which lawsuit should be where and which claims should be in which lawsuit," Mr. Joseph said.But David Boies of Boies, Schiller & Flexner said there were two reasons why there remained some "significant urgency" in the matter."First, Citi's press people are out telling the press, and some of the press are reporting it, that because of the size of the $60 billion damage claim that Citi has raised, this threatens the Wells Fargo deal and that Wells Fargo and Wachovia would be forced to settle this case before they can close," Mr. Boies. He added that the issue "continues to unsettle the market" and makes it important that the case be resolved relatively quickly.Second, Mr. Boies, assured the judge, there were two issues that "can be teed up for the court rather promptly."The first is the impact of §126(c) of the Congressional bailout package signed into law on Oct. 3, the Emergency Economic Stabilization Act (EESA), which renders unenforceable any agreement that purports to restrict the sale of a lending institution where the Federal Deposit Insurance Corporation has stepped in to confront "systematic risk" in the mortgage market.Citigroup insists that a letter or "exclusivity" agreement it signed with Wachovia on Sept. 29, an agreement it says foreclosed the Wells Fargo deal and establishes its claims for damages, is not barred by §126(c).Wachovia and Wells Fargo argue that the letter agreement fits squarely within the terms of §126(c) and is therefore unenforceable as "contrary to public policy."Their reasoning is that the Citigroup offer for Wachovia was approximately $1 per share and involved the FDIC committing billions to back up distressed assets. The Wells Fargo deal, they argued, was better for shareholders because it was about $7 per share and better for the taxpayers because no federal guarantees were involved.The second argument that Mr. Boies said could be "teed up" quickly was Wachovia's position that enforcing the letter agreement would prevent its board of directors from fulfilling their fiduciary responsibilities to shareholders to pursue the best deal.
Citigroup Drops Bid to Block Wachovia Sale, Presses Ahead With $60 Billion Suit for Damages
By Mark Hamblett
October 14, 2008
Citigroup, Inc. may have abandoned its attempt to purchase the assets of Wachovia Corp. but continues to pursue its claim for $60 billion in damages.The focus in the latest manuevering was whether those claims belonged in federal or state court.Citigroup no longer is seeking to block the acquisition of Wachovia by Wells Fargo for $15 billion but insisted in a statement Thursday that "it has strong legal claims against Wachovia, Wells Fargo and their officers, directors, advisers and others for breach of contract and for tortious interference with contract" and that it "plans to pursue these damage claims vigorously."Wachovia filed notice of removal of Citigroup's state suit Friday. Southern District Judge Lewis Kaplan will now hear Citigroup's argument for an order of remand.Judge Kaplan conducted a telephone conference with the three parties Friday morning. He said that he did not see any reason to hold an immediate hearing but indicated that "Monday is a possibility."Judge Kaplan instructed the parties to send him certified copies of all papers filed with New York State Supreme Court Justice Charles Ramos (See Profile) in Citigroup's lawsuit. Justice Ramos has scheduled a hearing for Tuesday on the suit."I want to understand where things stand, and most particularly whether there is any great urgency, given the developments in the commercial sphere," Judge Kaplan said, according to a transcript from the teleconference. "As I understand it, regardless of the sequence of events last night, Citigroup has put out a press release saying that they have basically withdrawn from the field of battle, they are no longer seeking to block the Wells Fargo merger, and that they will pursue their remedies, such as they may be, at law."Gregory Joseph, representing Citigroup, confirmed for the judge that Citigroup's action was now just one for damages and that it was no longer seeking to block the deal."We can deal with this in normal, methodical fashion, which will include addressing the threshold issues about which lawsuit should be where and which claims should be in which lawsuit," Mr. Joseph said.But David Boies of Boies, Schiller & Flexner said there were two reasons why there remained some "significant urgency" in the matter."First, Citi's press people are out telling the press, and some of the press are reporting it, that because of the size of the $60 billion damage claim that Citi has raised, this threatens the Wells Fargo deal and that Wells Fargo and Wachovia would be forced to settle this case before they can close," Mr. Boies. He added that the issue "continues to unsettle the market" and makes it important that the case be resolved relatively quickly.Second, Mr. Boies, assured the judge, there were two issues that "can be teed up for the court rather promptly."The first is the impact of §126(c) of the Congressional bailout package signed into law on Oct. 3, the Emergency Economic Stabilization Act (EESA), which renders unenforceable any agreement that purports to restrict the sale of a lending institution where the Federal Deposit Insurance Corporation has stepped in to confront "systematic risk" in the mortgage market.Citigroup insists that a letter or "exclusivity" agreement it signed with Wachovia on Sept. 29, an agreement it says foreclosed the Wells Fargo deal and establishes its claims for damages, is not barred by §126(c).Wachovia and Wells Fargo argue that the letter agreement fits squarely within the terms of §126(c) and is therefore unenforceable as "contrary to public policy."Their reasoning is that the Citigroup offer for Wachovia was approximately $1 per share and involved the FDIC committing billions to back up distressed assets. The Wells Fargo deal, they argued, was better for shareholders because it was about $7 per share and better for the taxpayers because no federal guarantees were involved.The second argument that Mr. Boies said could be "teed up" quickly was Wachovia's position that enforcing the letter agreement would prevent its board of directors from fulfilling their fiduciary responsibilities to shareholders to pursue the best deal.
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