Recently in the news we had the announcement about Citigroup improving their “algorithms” for their client investors to compete with Goldman Sachs, so there’s a 
lot money in the use of mathematic formulas.
Citigroup Releases New Trading Algorithms In Hopes to Capture Business From Goldman Sachs and Credit Suisse Groupe – It’s all About Those “Algos”
In this case the hospital is stating that they were falsely marketed and thus the reasons for their loss and they potential risk was not disclosed. This sounds like what we heard last week in the Senate with disclosure issues and the interest rates went beyond the 12% allowed by law. BD
Tri-City Medical Center, Oceanside, Calif., has sued Citigroup, New York, alleging the bank misled hospital executives or falsely marketed tax-exempt bonds sold in auctions with claims that the debt was relatively low risk.
The hospital refinanced $68 million of long-term debt to auction-rate bonds roughly nine months before the nation’s emerging credit crisis paralyzed the $330 billion auction market. When the $330 billion market collapsed in February 2008, interest on the auction bonds spiked. The hospital’s soaring interest rates exceeded limits set by California law for public hospitals and cost Tri-City Medical Center $15 million, according to the lawsuit.
Under California law, the hospital cannot assume debt with interest rates above 12%, the lawsuit said. Interest on Tri-City’s auction bonds climbed above the state limit repeatedly between November 2008 and December 2009, reaching as high as 14.5%, according to the complaint.Alex Samuelson, a Citigroup spokesman, declined to comment on the lawsuit. The lawsuit, filed in Orange County Superior Court, also names MBIA and alleges the bond insurer was aware of auction bonds’ risks but failed to disclose them. MBIA spokesman Kevin Brown declined to comment on the litigation.
“It appears to attempt to blame advisers for the hospital’s losses that occurred when the financial markets collapsed, and Tri-City’s auction-rate securities were impacted,” Kaufman said. “Tri-City had been fully advised of all risks relating to these securities, and was solely responsible for final decisions on their financing program.”
Calif. hospital sues Citigroup, advisers - Modern Healthcare
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