Earlier this week, Cuomo's office filed similar charges against rival investment bank UBS for similiar reasons.
An investigation by the attorney general revealed that the bank didn't comply with legal obligations under New York state law when it destroyed certain documents and telephone conversations tied to the marketing, sale and distribution of the auction-rate securities.
Earlier Friday, the U.S. Securities and Exchange Commission said it had opened a formal probe into possible violations of federal securities laws in connection with the sale of auction-rate securities.
The largest U.S. bank by assets also said it is responding to subpoenas from state agencies, including those in Massachusetts, New York and Texas, concerning the securities.
Regulators are examining whether banks and brokerages nationwide misrepresented the safety of auction-rate securities to investors. The $330 billion market normally lets municipal issuers borrow money long-term but at lower, short-term rates.
Some of the market remains frozen after a February meltdown in which brokerages quit their role as buyers of last resort.
Separately, Citigroup said it is cooperating with information requests from governmental and self-regulatory agencies regarding several bank-managed hedge funds, including Falcon Two, ASTA and MAT Five.
Citigroup disclosed the various regulatory actions in its quarterly report filed with the SEC.
-Reuters contributed to this report.