The Securities and Exchange Commission lost a jury verdict in its lawsuit against former Citigroup Inc. official Brian Stoker over a deal at the center of the bank's proposed $285 million settlement with regulators over subprime residential mortgage securities, Bloomberg News reported yesterday. The SEC had accused Stoker, the former director of Citigroup’s collateralized debt obligation structuring group, of violating securities law in putting together the assets underlying a $1 billion CDO. The SEC claimed New York-based Citigroup structured and sold the CDO without telling investors that it helped pick about half the underlying assets and was betting they would decline in value by taking a short position. "This verdict should not deter the SEC from continuing to investigate the financial industry, to review current regulations, and modify existing regulations as necessary," the jury said in rendering its decision that Stoker was not liable.
