The Securities and Exchange Commission (SEC) launched an informal investigation regarding the ouster of Vikram Pandit as chief executive officer of Citigroup Inc. (NYSE:C), and wants to know if the board of directors of the bank revealed the information about his dismissal appropriately, according to the report from FOX Business Network.
The information regarding SEC’s inquiry on Pandit’s exit came from a source with knowledge about the issue. According to the source, the Commission is interested in finding out the real circumstances that prompted Pandit to submit his official resignation from Citigroup.
Pandit’s resignation from the company became controversial, due to reports that he was pressured by shareholders and fellow executives within the bank to step down as CEO. Charlie Gasparino, senior correspondent for FOX Business News commented in his report last October 16 that Pandit was ousted due to management missteps.
In a follow-up report, Gasparino cited that Citigroup chairman Michael O’Neill and director Diana Taylor led the “uprising of the board” of Citigroup over the $5 billion Smith-Barney write-down two months ago. Pandit’s job in the company had been in jeopardy for months.
The board of directors of Citigroup Inc. (NYSE:C) indicated to Pandit that they lost their confidence on his capability to lead the company, and they wanted him to submit his resignation immediately, according to a previous report from FOX Business News.
On the other hand, O’Neill and Pandit told a different story during interviews and conference calls with analysts. According to them, it was Pandit’s decision to vacate his position. O’Neill said, “Vikram chose to submit his resignation and the board accepted it.”
During the third quarter earnings conference call of Citigroup Inc. (NYSE:C), O’Neill did not reveal any information regarding Pandit’s resignation later in the afternoon on October 16.
SEC chairperson Mary Schapiro did not provide any comment regarding the report that the Commission is looking into the details of Pandit’s resignation in an interview with Cheryl Casone of FOX Business Network. Schapiro said, “You know… I’m sorry Cheryl; that’s something I can’t comment on.”
According to former SEC chairman Harvey Pitt, Citigroup Inc. (NYSE:C) might face a regulatory problem, due to its failure to inform the shareholders regarding its decision on Pandit’s resignation. In addition, he said, the reason for Pandit’s exit is significant, regarding whether the board pushed him out. The company released a false statement if that is the case. Pitt said, “The reason for the CEO’s departure is material, and Citigroup had an obligation to disclose any information necessary to render its statements fair, accurate, and complete. If the board forced Pandit out, Citigroup didn’t do that.”
There are rumors that Pandit might return to the hedge fund business. According to reports, the former Citigroup CEO is in discussions with Sutesh Sharma, founder of Portman Square Capital, hedge fund based in the UK.