Citigroup (C) Faces SEC Probe Over Debt Funds

According to media reports, the Securities and Exchange Commission has probed Citigroup Inc. (NYSE: C) to investigate whether the bank properly disclosed risk levels of its debt funds to investors.

The Wall Street Journal reported that the SEC has also subpoenaed Citigroup's former brokers for testimony. The brokers had resigned from Citigroup's Smith Barney unit in 2008/

Citigroup had used borrowed money to invest in municipal bonds and mortgage debt through its debt funds. Following the credit crisis, the funds tumbled 77 percent to a low in March 2008.

The SEC declined comment to the Journal to confirm the report.

Citigroup denied misleading investors and said that its disclosure practices were adequate, saying tat the investors were notified that the funds were more volatile than the stock market.

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