Citigroup agrees to pay $730m to settle class-action lawsuit
The second-biggest financial-crisis-related payout.
The US financial services firm Citigroup has agreed to pay $730m to settle a class-action lawsuit filed by investors four years ago.
The amount to be paid will be covered by existing litigation reserves.
Plaintiffs in the class-action suit include the Arkansas Teacher Retirement Systems and the Louisiana Sheriffs’ Pension and Relief Fund. The suit alleges that Citigroup misled investors in its bonds and preferred stock over its exposure to sub-prime mortgages between 2006 and 2008.
Citigroup said that it “denies the allegations and is entering into this settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation”.
In 2012, Citigroup paid $590m to settle a lawsuit filed by shareholders accusing the bank of failing to disclose fully its exposure to toxic mortgage products in the run-up to the financial crisis.
In 2010, the firm also agreed to pay $75m to the US Securities and Exchange Commission (SEC) to settle civil charges that it had failed to disclose to investors more than $40bn of sub-prime exposure.
The bank, in a statement, said: “Citi is a fundamentally different company today than at the beginning of the financial crisis. We have overhauled risk management and reduced risk exposures, while shedding assets and businesses that are not core to our strategy.”
In 2012, the Bank of America (BofA) paid $2.4bn to shareholders to settle a lawsuit, which remains the biggest crisis-related class-action settlement. The suit alleged that BofA had concealed information about the financial health of Merrill Lynch.