Enron Corp. - University of California | Office of The President

685. In addition to actively engaging and participating in the scheme to defraud, CitiGroup
also made false and misleading statements to the securities markets about Enron. First of all, the
Registration Statement and Prospectuses for Enron securities sales where CitiGroup was one of the
underwriters contained false and misleading statements – which are statements made by CitiGroup
as an underwriter – including false interim and annual financial statements, and false statements
concerning the structure of and Enron's relationship to SPEs and related parties. CitiGroup is liable
under §11 for its participation in the following offerings as a lead underwriter:
8/99 $222 million 7% Enron exchangeable notes
CitiGroup is also liable for its participation in the resale of the Enron zero coupon convertible notes
on and after 7/18/01.
686. In addition, throughout the Class Period, CitiGroup issued analysts' reports on Enron
which contained false and misleading statements concerning Enron's business, finances and financial
condition and its prospects, including, but not limited to, those dated 10/22/98, 1/27/99, 5/25/99,
7/20/99, 8/20/99, 9/20/99, 10/20/99, 4/12/00, 9/21/00, 3/12/01, 3/22/01, 5/18/01, 6/7/01, 7/13/01,
10/16/01 and 10/19/01, as pleaded herein. These were all statements by CitiGroup to the securities
markets which helped to artificially inflate the trading prices of Enron's publicly traded securities.
Keeping Enron's stock price inflated was important to CitiGroup as it knew that if the stock price
fell below certain "trigger" prices, Enron would be required to issue millions of additional Enron
shares which would reduce Enron's shareholders' equity by hundreds of millions, if not billions, of
dollars, endangering its investment-grade credit rating, cutting off access to the capital markets and
thus endangering the ongoing operations of the scheme from which CitiGroup was profiting.
687. CitiGroup also actively participated in the Enron fraudulent scheme by helping
structure and finance the critical LJM2 partnership. In this regard and as a reward for CitiGroup's
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