A New York jury was asked on Monday to decide who may have lied in a dispute over a Citigroup-backed, $6.4 billion buyout of legendary music company EMI by British financier Guy Hands in 2007.

The outspoken Hands and his onetime Citigroup banker friend David Wormsley sat feet away from each other at their respective lawyers' tables in U.S. District Court when the trial began, the firms apparently unable to settle a fraud claim brought by Hands's Terra Firma Capital Partners [TERA.UL].

Wormsley, who is accused by Terra Firma of misleading Hands into thinking in May 2007 that there was a bid by Cerberus Capital Management LP at auction for the EMI company, "was playing two sides of the street at the same time," Hands' lawyer, David Boies, told the jury.

Boies argued in a 45 minute-long opening statement that email evidence to be presented by Terra Firma at the trial would show Wormsley "secretly promised EMI to use his relationship with Guy Hands and Terra Firma to help EMI" obtain added value.

Terra Firma was pressured into making a higher bid for the company than it would have if it had known there were no other offers, said Boies, chairman of law firm Boies, Schiller & Flexner.

Citigroup Inc denies the allegations that Wormsley, one of its top European bankers, misled Hands in telephone conversations with him on a weekend in May 2007 or otherwise.

The bank's lawyer, Ted Wells, argued that Citigroup's evidence would show that as time went on, Hands realized his purchase of EMI was not a good business deal, so he sued the bank in 2009.

"After a while Mr. Hands had a new story," Wells told the nine-member jury, which was selected on Monday.

"There was no fraud, no lies. Nobody tricked him," Wells, of Paul, Weiss, Rifkind, Wharton & Garrison LLP, said in his opening statement.

Hands and Wormsley kept up a personal and business relationship after the deal, according to court papers.

Citigroup backed the EMI acquisition with 2.6 billion pounds in loans. The 4 billion-pound ($6.4 billion) deal by Terra Firma came to epitomize the perils of loading companies with debt and the associated risks.

Hands and Wormsley are both expected to testify at the trial presided by U.S. District Judge Jed Rakoff. Boies and Wells are two of the most high-profile corporate trial lawyers and Rakoff is vastly experienced in financial cases.

Settlement talks between Citigroup and Terra Firma broke down last Wednesday, The Wall Street Journal reported on Saturday, citing two people familiar with the matter.

Both Terra Firma and Citigroup say they are confident of success at the trial, which is expected to last about three weeks. Lawyers are likely to hold informal talks even during the trial and could halt the process at any point.

Citigroup, which is struggling to distance itself from its near collapse during the financial crisis two years ago, reported a better-than-expected quarterly profit on Monday.

The case is Terra Firma et al v Citigroup et al, U.S. District Court for the Southern District of New York, No. 10-10459.