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Citigroup Agrees to Pay $730 Million to Settle With Investors

Monday, 18 Mar 2013 | 7:39 PM ET
Citigroup Headquarters in Long Island City, New York.
Stephen Hilger | Bloomberg | Getty Images
Citigroup Headquarters in Long Island City, New York.

Citigroup has agreed to pay $730 million to settle a class action lawsuit on behalf of investors who said they were misled by the company's disclosures.

Purchasers of the bank's debt and preferred stock between 2006 and 2008 claimed there were misstatements and omissions in the disclosures, Citigroup said in a statement announcing the proposed settlement.

(Read More: Citigroup Asks to Spend $1.2 Billion on Stock Buybacks)

The investors accused the bank of bank understating loss reserves for its high-risk residential mortgage loans and falsely stating risky assets were of high credit quality, according to Bernstein Litowitz Berger & Grossman, a lawfirm that represented pension funds and other investors in the case.

The bank denied the allegations and said it was entering into the settlement to end the litigation. It said the settlement would be covered by existing litigation reserves.

(Read More: Citi CEO Corbat: 'Not Afraid' to Make Additional Cuts)

"This settlement is another significant step toward resolving our exposure to claims arising from the financial crisis," the bank said in its statement.

The class action was filed on behalf of purchasers of 48 offerings of preferred stock and bonds, the law firm said.

(Read More: Citigroup Bows to Shareholder Pressure, Overhauls Pay)

The proposed settlement, which will be reviewed by U.S. District Court Judge Sidney Stein in New York, comes after more than four years of litigation.

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