A Manhattan jury decided Tuesday that a Citigroup employee who sold a mortgage security without telling customers that the bank was betting against some of the underlying mortgages did not violate any securities laws. The Wall Street Journal characterizes the verdict as a blow to the Securities and Exchange Commission’s effort to prosecute executives involved in the financial crisis.
The charges involved a collateralized debt obligation (CDO) that the Citi director, Brian Stoker, worked on in 2007. The SEC has filed charges against other executives at financial firms related to sales of mortgage securities.
The jury put out a statement arguing that its verdict “should not deter the SEC from continuing to investigate the financial industry.”