While we reported last week that Citigroup (C: sentiment, chart, options) was mulling a lawsuit against Wachovia (WB: sentiment, chart, options) and Wells Fargo (WFC: sentiment, chart, options), the jilted banking concern made it official today. Citi filed suit against WB, WFC, and the directors of the 2 companies, and is seeking more than $20 billion in compensatory damages and more than $40 billion in punitive damages from Wells Fargo for the interference (I guess that's one way to shore up your balance sheet). The WFC deal for WB, which valued Wachovia at roughly $7 per share, was cleared by a judge over the weekend. The judge vacated an earlier ruling which barred the merger, citing Citi's contract with Wachovia and the exclusivity clause that forbid WB from dealing with anyone else.

"This was always a deal Citi wanted rather than one we needed....The Citi/Wachovia transaction would have been signed and announced on Friday, October 3, if it had not been subverted by the unlawful conduct of Wachovia, Wells Fargo, and their officers and directors and outside advisors," said Citi in a statement.

In related news, WFC was upgraded to "market perform" at both Keefe Bruyette and Friedman Billings, while RBC Capital Markets reiterated its "outperform" rating and Argus cut the shares to "hold." Looking at data from Zacks.com, there is more room for upgrades than downgrades, however, as just 4 analysts rate the shares a "buy," while 12 rate WFC a "hold" or worse.

Technically, today's near-6% pullback in the stock has placed WFC near long-term support at the 32 level. The shares are also sitting on a year-to-date gain of more than 14%, outperforming its peers in the Select Sector Financial SPDR (XLF), which has lost more than 35% during this time frame.