Citigroup Shareholders Should Back Foreclosure Audit, ISS Says
Citigroup Inc. (C) investors should vote for New York City Comptroller John Liu’s proposed audit of the bank’s foreclosure practices at its April 21 annual meeting, a shareholder consulting firm said.
A vote for the independent review proposed by Liu, whose office oversees the city’s $113 billion pension funds, would be a signal that “board action and additional transparency on this issue” are needed, according to a report by ISS Proxy Advisory Services, a unit of MSCI Inc. (MSCI) Some institutional shareholders rely on ISS to guide them in company elections.
Citigroup, the fourth-largest U.S. mortgage servicer, is among lenders targeted by 50 attorneys general in a nationwide probe into mortgage practices. The New York-based bank, which has continued to seize homes and defended its procedures, previously disclosed that it may need to refile thousands of foreclosure documents. Liu’s office controlled about 62 million Citigroup shares as of the end of March 2011.
Liu’s request is “a step in the right direction,” the ISS report said. “Given historical failures of risk management and oversight at Citi and the sums of money potentially at stake, Citi’s board, via the audit committee, has a heightened responsibility to be proactive on this issue.”
The proposal would have the bank’s audit committee do an independent review of the bank’s internal controls over its mortgage unit. The bank said in a March 10 proxy filing that the proposal is “unnecessary.”
Citigroup’s audit committee chairman is Lawrence Ricciardi, a senior adviser to International Business Machines Corp. (IBM) and Lazard Freres & Co. The committee’s other two members are Robert Ryan, a former chief financial officer of Medtronic Inc., and Anthony Santomero, a former president of the Federal Reserve Bank of Philadelphia. Jon Diat, a spokesman for the bank, declined to comment.
To contact the reporters on this story: Donal Griffin in New York at Dgriffin10@bloomberg.net;
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
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