Vanguard Sue Citibank Over Enron Notes

NEW YORK -- Several Vanguard Group funds have sued Citibank and Salomon Smith Barney, accusing them of participating in a fraud that induced the funds to buy more than $70 million in Enron-linked notes that are now worthless, Reuters reported Friday.

Besides the two Citigroup Inc. units, the suit names a third defendant, Delta Energy Corp., which it describes as a Cayman Islands affiliate of Citibank.

The funds filed the suit on Wednesday in a state court in West Chester, Pa. Vanguard, with headquarters in nearby Valley Forge, is the second-largest U.S. mutual fund company.

The suit alleges that proceeds of the Yosemite Trust Notes, which in total amounted to some $800 million, were used to repay Enron Corp.'s debt to Citibank.

-- NYSSCPA.org News Staff

Posted on 04/11/03