Off in a small corner of the judicial system is a big-time Wall Street lawsuit that neither side in the dispute wants anyone to know much about.
Bloomberg contributor Willam D. Cohan writes that thanks, however, to George B. Daniels - the federal judge in the case - we can catch a rare glimpse of what happens when a multibillion-dollar investment a supposed pillar of Wall Street goes terribly wrong.
At issue is the $7.5bn investment that Abu Dhabi Investment Authority, a large sovereign wealth fund, made in Citigroup Inc. (C) in November 2007, just after the bank fired Chairman and CEO Chuck Prince. Michael Klein, one of Citigroup’s most senior investment bankers, negotiated the deal; Robert Rubin, the former Treasury Secretary, in nearly his first official act after taking over for Prince as Citigroup’s chairman, flew off to Abu Dhabi to bless it.
A year later, of course, Citigroup collapsed, and American taxpayers bailed it out to the tune of $45bn, plus another $306bn to ring-fence a pile of toxic assets. ADIA, as the Abu Dhabi fund is known, lost nearly its entire investment after Citigroup’s shares were diluted down to pennies on the dollar by the rescue financing. (ADIA did receive some $2.5bn in dividends on its stock before Citigroup’s implosion.)
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William D. Cohan is the author of the recently released Money and Power: How Goldman Sachs Came to Rule the World and the New York Times bestsellers House of Cards and The Last Tycoons.
Cohan is a contributing editor at Vanity Fair and writes frequently for Financial Times, Fortune, The Atlantic and The Washington Post. He worked on Wall Street as a senior mergers and acquisitions banker for 15 years. He also worked for two years at G.E. Capital. Cohan is a graduate of Duke University, Columbia University School of Journalism and Columbia University Graduate School of Business. The Last Tycoons won the 2007 Financial Times/Goldman Sachs Business Book of the Year Award.