Yesterday, Citigroup, Inc. acknowledged that the Abu Dhabi Investment Authority (ADIA), reportedly the Middle East’s largest sovereign wealth fund, has filed an arbitration claim seeking rescission of an investment agreement regarding the sale of equity units by Citigroup to ADIA in 2007 or damages greater than $4 billion. The equity units obligate ADIA to purchase an aggregate of $7.5 billion in common equity of Citigroup on specified dates in 2010 and 2011 at prices ranging from $31.83 to $37.24 per share (as compared to yesterday's $3.56 closing price of Citigroup common stock). The arbitration claim filed by ADIA alleges fraudulent misrepresentation on the part of Citigroup in connection with the sale. Citigroup disputed the allegations and stated that it "intends to defend against them vigorously." The complaint filed by ADIA is not publicly available.
Earlier this week, Citigroup announced that it would repay $20 billion to the U.S. government that it received under TARP, among other capital-related transactions.