Citigroup agreed to pay $590m (£372m) to settle a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets, one of the largest settlements stemming from the global financial crisis.
The agreement resolves claims that shareholders ended up with massive losses after the bank failed to take timely write-downs on collateralized debt obligations, many backed by subprime mortgages, and engaged in self-dealing transactions that hid the risks.
Citigroup denied wrongdoing in agreeing to settle. It called the accord "a significant step toward resolving our exposure to claims arising from the period of the financial crisis," and said the $590m is covered by existing reserves.
US District Judge Sidney Stein in Manhattan yesterday granted preliminary approval of the settlement, and scheduled a 15 January 2013 hearing to consider final approval.
Investors have sued an array of banks over their conduct leading up to and during the 2007-2008 financial crisis.
In 2010, Bank of America Corp agreed to a $601.5m settlement related to its Countrywide mortgage unit. Last year, Wells Fargo & Co reached a $590m accord over loans and securities from the former Wachovia Corp.
City A.M. Reporter