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  • Fed's Stake in Citigroup Inc. (NYSE:C) Creates Conflict of Interest

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    Friday Oct. 15, 2010 at 08:36 am EST
     
    Fed's Stake in Citigroup Inc. (NYSE:C) Creates Conflict of Interest for GM IPO 
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    The government's stake in Citigroup presents a conflict in General Motor's pending initial public offering, the company reported on Thursday. The federal Government Treasury owns around $3.6 billion shares of Citigroup's common stock, which is around 12.4% of total stocks. This consitutes a conflict of interest under financial industry rules, reported GM in a filing with the Securities and Exchange Commission. Treasury also has 61% stake in Detroit auto giant. The situation might require the Citgroup Inc. to get consent if they want to sell GM shares to clients with discretionary accounts.

    GM reportedly is hoping to raise $8 billion to $10 billion with very less stock sales than was first planed. Though the company has not yet set price for its shares, Chairman Ed Whitacer has said that GM's common stock will be priced between $20-$25 / share to make them affordable to small investors. It is also planning to hold around 5% share for employees, retirees and dealers so that they can purchase at IPO price. The parties till Oct. 22 will have to sign up to participate in the program and invest around $1,000.

    Shares of Citigroup Inc. closed at $4.06 on Wednesday at the support  level of $4. The resistance levels above are at $4.2, $4.41 and $4.98. The support levels below are at $3.87, $3.72. Earlier this week Citigroup Inc.  Offered a New Deal to Lehman Bondholders . Treasury also said that they made profit by selling Citi shares. Earnings announcement for Citigroup Inc. (NYSE:C)  is Scheduled on Oct. 18, 2010.

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