UPDATE 1-Solow lawsuit over Citigroup disclosures dismissed | Reuters

* No link between surfacing of risks and stock price drop

* Intent to defraud adequately shown

* Solow may replead case

By Jonathan Stempel

Nov 22 (Reuters) - Citigroup Inc (C.N) and its Chief Executive Vikram Pandit won the dismissal of a lawsuit by New York real estate developer Sheldon Solow, accusing them of hiding the bank's risks during the 2008 financial crisis.

U.S. District Judge Robert Sweet in Manhattan said Solow failed to establish that his losses in Citigroup stock were caused when the liquidity and capitalization risks that Citigroup supposedly concealed came to the surface.

The judge nonetheless said Solow "has presented sufficient evidence of the defendants' intent to defraud," and gave him 20 days to refile his case.

"We are pleased that the judge found we adequately pleaded recklessness," Ira Lee Sorkin, a partner at Lowenstein Sandler representing Solow, said in an interview. "We are reviewing the decision to determine whether to replead on the issue of loss causation."

A Citigroup spokeswoman had no immediate comment.

The lawsuit is separate from litigation by groups of Citigroup stock and bond investors before Sweet's colleague, U.S. District Judge Sidney Stein, regarding the bank's disclosures about its exposure to toxic mortgage debt.

Solow said he paid about $510,000 for 40,000 Citigroup shares in September and November 2008, and lost 87 percent when he sold the stock in March 2009.

The developer contended Citigroup overstated its financial stability in September 2008 after Lehman Brothers Holdings Inc (LEHMQ.PK) went bankrupt, and while Pandit tried to buy part of Wachovia Corp, later bought by Wells Fargo & Co (WFC.N).

Solow also said Citigroup told investors in October and November of that year that it had strong capital levels and liquidity, even as it was working to obtain a government bailout that included a $20 billion capital injection and $306 billion guarantee for its troubled assets.

But Sweet said Solow did not sufficiently show that the decline in Citigroup's stock price at that time was necessarily related to the realization of any alleged concealed risk.

The complaint in fact "seems to link Citigroup's liquidity crisis with a lack of confidence in the firm, rather than (be) attributable to the materialization of a risk (that the) defendants concealed in the fall of 2008," the judge wrote.

The case is Solow v. Citigroup Inc et al, U.S. District Court, Southern District of New York, No. 10-02927. (Reporting by Jonathan Stempel in New York; editing by Bob Burgdorfer)