November 6, 2007 -- Citigroup's board saw the writing on the wall months ago, but did little to stop the world's largest bank from crashing and taking the rest of Wall Street with it. A handful of Citigroup's highly paid directors did take a few timid baby steps last summer to find a replacement for then-chief Chuck Prince, but backed down almost as soon as they had embarked on their quiet coup, according to a source familiar with the matter. As Citigroup's turmoil deepened yesterday, stocks of Wall Street's top seven banks tanked - with five of them hitting new 52-week lows and wiping out nearly $17 billion in stock value - pushing the blame game wider across the economic landscape. Governance experts said the brunt of the blame for Citigroup's problems and turmoil rests with its 13 directors, excluding Prince, who collectively earned $43.8 million in compensation last year. "Directors are not like some kind of 1950s housewife who was always the last to learn about the misadventures of her husband," said J. Richard Findlay, head of The Centre for Corporate & Public Governance. "Their job is to oversee the CEO and to be aware of key events in strategy and risk at every stage along the way," Findlay added. Sandler O'Neill analyst Jeff Harte said, "Public comments in support of Mr. Prince and recent management changes made by Mr. Prince suggest that the board was as surprised as anyone by [Citi's] CDO related exposures." Insiders said some directors had been anticipating carnage from its junk mortgages as far back as the summer of 2006, with the board's risk-management panel holding more sessions than any other committee in that year and in early 2007. But before the risk panel or board ever made its fears public, insiders began selling their shares, according to regulatory filings. Robert Rubin - the board's key director who was named the chairman Sunday - unloaded the most stock. He sold $4.5 million worth of shares on Jan. 24, 2007, at $55.05 before shares collapsed. Two other senior executives also sold shares as the woes in the credit markets began gathering momentum in August 2006. Chief Operating Officer Robert Druskin sold $1.8 million worth of shares between August 2006 and January 2007 as the stock traded in the $54 range. http://www.nypost.com/seven/11062007/business/board_stiffs_949176.htm
According to some info I found, Rubin's holdings decreased from ~222,000 shares down to ~140,000 shares with that sale. Druskin still has ~1,180,000 shares. If they had completely sold out of their holdings, then you could've brought up allegations of trading on inside information.
i think the point is not illegal sales but spending the time to discuss sales and not concentrating on the impending subprime meltdown to the shareholders and investors when they kind of knew something was up.