The Treasury has initially granted the underwriter Morgan Stanley authorization to sell 1.5 billion of the shares, Citigroup said Monday in a registration statement filed with securities regulators. The filing allowed the Treasury to begin selling as soon as Monday, said two people with knowledge of the matter, who declined to be identified because they were not authorized to comment beyond the public statements.

The Treasury's overall stake has a value of about $36 billion, representing a paper profit of $11 billion for the agency. The government got the shares by converting $25 billion of bailout money into common stock at $3.25 each.

The Treasury will sell its common shares in the market "in an orderly fashion under a pre-arranged written trading plan," the agency said Monday. The government devised the plan earlier this year to help insulate officials from politically driven claims they mistimed the market and got too little profit from the sales, people familiar with the matter said at the time.

Citigroup spokesman Stephen Cohen declined to comment. The Treasury stake is the government's biggest remaining investment in Citi, after the company repaid $20 billion of the bailout funds in December. The government still owns about $5 billion of the company's trust-preferred securities, a class of junior debt. The Treasury did not release further details about the timing of the sale of common shares.

According to the filing, Citigroup must pay Morgan Stanley's fees for underwriting the Treasury's offering. Morgan Stanley was chosen in March after the government interviewed several investment banks, including Citigroup.

Morgan Stanley, the sixth-largest U.S. bank by assets, will get 0.3 cents for each share sold on electronic trading systems and 1.75 cents for shares sold through other means, according to the filing. That works out to total fees of $23 million to $135 million. Citi will also get a one-time administration fee of $500,000.

The Citi shares will be sold over the course of 2010, the Treasury has said.

The Treasury's trust preferred securities in Citigroup, and warrants to buy additional common shares, will be sold separately, the department said.

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