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Citi, firm head to court over EMI deal

The building formerly known as the Citigroup Center, which continues to house the company, is seen in midtown Manhattan in New York City.

TEXT OF STORY

STEVE CHIOTAKIS: A multi-billion dollar court battle begins today in New York. A private equity firm is slugging it out with Citigroup. The case centering on the purchase of EMI, the British-based music label whose catalog includes the likes of Frank Sinatra and the Beatles. Marketplace European bureau chief Stephen Beard is here with us live from London with the latest. Hi Stephen.

STEPHEN BEARD: Hello Steve.

CHIOTAKIS: So who's suing whom?

BEARD: Guy Hands, the boss of a private-equity firm, is suing Citi. He claims the bank tricked him into buying EMI at the height of the buyout boom in 2007. He says Citi told him there was another bidder and that was untrue. Guy Hands says, as a result, he overpaid for EMI. He certainly did overpay. He forked out the equivalent of $6.7 billion just before the crash and EMI has since lost more than $3 billion.

CHIOTAKIS: That's a lot of money. It sounds like there's a lot at stake in this case, Stephen.

BEARD: Yes, very much so. Guy Hands is claiming up to $8 billion in damages. And if he wins, analyst Claire Enders says many other banks could face hefty lawsuits.

CLAIRE ENDERS: Their transactions would be questioned. And a similar sort of outcome could be imagined for the very large number of deals that were done in 2006-2007.

Citigroup denies that it misled Guy Hands. The case, however, should shine a fascinating light into some of the darker recesses of high finance at the height of the boom.

CHIOTAKIS: Marketplace's Stephen Beard reporting from London. Stephen, thanks.

BEARD: OK Steve.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.
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Cue the Sex Pistols' classic "EMI".

"... and blind acceptance is a sign
of stupid fools who stand in line
like EMI... Goodbye."

If this goes through... I want to be able to sue for paying too much for my mortgage just before the housing crash. And that would be far less than $8 billion. Heck I bet everyone under water could be made whole with that...

I hope we as a people stop letting corporations get away with all matter of financial risk options barred to individuals.

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