The details of the transaction are complicated. But here's how it boils down: One group within Citigroup packaged an investment portfolio of mortgage-backed securities using toxic subprime loans.
The SEC complaint quotes an insider as describing the portfolio as dog waste, although the language was far more vivid.
"The portfolio is horrible," the insider is quoted as saying.
The scheme turned worse when a second group within Citigroup took a short position on the portfolio, betting that the assets were so horrible that they would go belly up.
It was "possibly the best short ever," an insider said, according to the SEC complaint.
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