As published WSJ, a Citi has had no choice but to negotiate the repurchase of seven billion $ (some sources cite more than twice that amount) of long-term debt instruments with auctionable interest rates or Auction Rate Securities (ARS), which sold with allegedly «malpractice»to its customers. The New York Attorney General's Office, the SEC and other federal authorities, have not ceased to pepper Citi with lawsuits until it has atoned for its sin, which is no less common than a cry to heaven. Citi sold instruments that with the credit crisis have dried up and become totally illiquid, as well as being left with a solvency as dubious as its own degraded underlyings today. The bank pushed to their clients to buy such instruments by assuring them that they were «insurance, liquid and near cash equivalents«The New York Attorney General Andrew M. Cuomo himself said, in his own words.
According to the US judicial system, it appears that Citi could be charged with «...the crime of fraud".«malpractice and poor advice«. Something that, on the other hand, is more than obvious and of simple Common Sense, but not at all obvious if we want to extrapolate it mentally to what our national bankers have been doing with all of us since private banking is private banking, and even in simple commercial banking. In addition to the 7 billion, it will pay another 100 million in fines.
The US is the country where «anything is possible», for better or worse. And among the good, we have seen how a giant such as Citi has been forced to buy back billions of illiquid product now in the hands of its clients and customers, to whom it sold the bike. An example to follow, despite the fact that it has only been possible after several lawsuits, threats and a heavy hand from the corresponding official bodies. But undoubtedly exemplary.
Some of you may be thinking: Why is it Citi's fault that we have been hit by a credit crisis that has wiped out the liquidity and solvency of countless financial instruments? The answer is, as did UBS, In the case of the latter, these sales took place on a massive scale when the entity was already aware that was placing some instruments that burned in the balance sheets of the bank. Even with sales insiders of the top management who took the dead body off their hands before anyone else without caring about the damage that would be suffered by their clients and purchasers. But even on the unrealistic assumption that these entities had not been aware of the problems of these securitisations, it is still a malpractice. Their incompetence cannot massively harm clients who have relied on their advice, and they must be compensated, even if only through judicial pressure. Something similar to what happens with medical malpractice, even if the error is unintentional. The sale of instruments based on subprime debts that have undergone the engineering of securitisation as liquids, insurance and near cash equivalents, The liability is a responsibility that should be debited to the bank's accounts and not to the customer's. Fortunately, it seems that UBS and Merrill Lynch will be added to the list. Fortunately, it seems that the list of entities that will be forced to compensate for their abuses will be completed with UBS and Merrill Lynch, for the time being... ?Will we one day see a European bank lobbied by European bodies on this list? I am afraid not.
It is an old, unfortunately familiar story. Already at the time of the Argentinean debt crisis we were forced by various commitments to intervene with banks to defend the interests of helpless savers who had hitherto only trusted their personal bank manager. We have seen how they had sold Argentinean debt pre-corralito, leveraging the life savings of widows and pensioners. The bank's arguments at the time were limited to phrases along the lines of: «...".«Who would have thought that Argentina would have such liquidity problems. We have never seen anything like it»and other such nonsense. Banks just sell as much as they can, without caring whether the buyer is an informed investor or a widow who blindly trusts the handsome tie-wearing clerk who sits as you enter the office on the right. Much less do they care whether they are risking their late husband's life savings or the recurring income of a well-off rentier. Oh, and the latest in customer information (MIFID), serves only to protect the institution from potential customer lawsuits and not the other way around, as you rightly said. Echevarri in its day.
It is true that among those who will be bought back there will be some well-informed people who knew what they were risking, just as a smoker must know the risk he runs with his cigarettes. But the person who is supposed to look after your health, i.e. your doctor, should never tell you that smoking will not harm you or even improve your general condition, especially if he or she has your absolute, blind and exclusive trust, as is usually the case. In the event of future harm, in my opinion, it is possible to claim for liability, with the aggravating factor that in the case of the doctor/smoker, financial compensation is not enough.
Let Sinners pay for the Just for once in their lives. But the accountability process in the US is, for the moment, only possible in the country where anything is possible. In the meantime, here, those affected by domestic sales of similar products will have to settle for an annoyance that will make them change their manager or, at most, their institution. 
The downside is that after each bank butchery, the weight of the customer in the new entity will be lower and therefore the «good investment opportunities» will be offered to preferential customers. What a pity.
Asking an employee of a financial institution that sells products to be a good advisor to its customers is like asking the Big Bad Wolf to give dinner to the Three Little Pigs, put them to bed and tell them a bedtime story. Oh... and in most cases the Piglets wouldn't even have been able to build themselves a little house of straw, but they refuse to pay for a professional babysitter because the Wolf doesn't charge them...
If you don't fight to end corruption and decay, you will end up being part of it.
Joan Baez.