A federal judge in New York dismissed a lawsuit Wednesday against two Citigroup Inc. units that had alleged they did not disclose to mutual fund customers millions of dollars in savings reportedly pocketed by its asset management business through the use of an affiliated transfer agent.
In an order Wednesday, U.S. District Judge William H. Pauley 3rd, dismissed claims by investors in the Smith Barney family of funds against Smith Barney Fund Management LLC and Citigroup Global Markets Inc., which are part of Citigroup Asset Management. The judge gave investors the right to replead some claims by Oct. 19.
The judge also dismissed claims against Thomas W. Jones, the former chief executive of Citigroup Asset Management, and Lewis E. Daidone, the former treasurer and chief financial officer of the Smith Barney family of funds. In February, another federal judge in Manhattan dismissed a similar case brought by the Securities and Exchange Commission against the former executives. Citigroup itself settled the SEC's charges in May 2005 and agreed to pay $208 million to the affected mutual-fund customers.
