Tuesday, March 19, 2013
Citigroup Inc. has agreed, subject to court approval, to settle a class action lawsuit brought on behalf of investors who purchased Citigroup debt and preferred stock in four dozen offerings during the period May 11, 2006, through November 28, 2008. Under the terms of the proposed settlement, Citi would pay a total of $730 million. According to the WSJ, this is the second-largest settlement of investor litigation related to the financial crisis.
Plaintiffs alleged that Citigroup misled them about Citigroup's possible exposure to losses backed by home loans, understated its loss reserves and misrepresented the credit quality of some assets.
Citigroup states that it denies the allegations and is entering into this settlement "solely to eliminate the uncertainties, burden and expense of further protracted litigation." The company released the following statement:
"This settlement is another significant step toward resolving our exposure to claims arising from the financial crisis, and we look forward to putting this matter behind us. 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. We are completely focused on our clients and generating consistent, high-quality earnings."