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Citigroup Agrees to Settlement Worth $730 Million
It was announced on Tuesday that Citigroup Inc will pay $730 million to settle a class action lawsuit filed on behalf of investors. The investors claim that they were misled by the disclosures of the company, according to Reuters.
The investors made purchases of the bank’s debt and preferred stock from 2006 to 2008. They claim that there were omissions and misstatements made in the disclosures, according to Citigroup, which released a statement about the proposed settlement.
The bank was understating loss reserves, according to investors in the class action lawsuit, for its high-risk residential mortgage loans. The bank was also accused of falsely stating risky assets were of high credit quality, according to the firm that represented pension funds and other investors in the lawsuit. The firm in the case is that of Bernstein Litowitz Berger & Grossman.
Citigroup said that it entered into the settlement in order to end the litigation, but it still denied the allegations made against it. The bank said that settlement is going to be covered by current existing litigation reserves.
“This settlement is another significant step toward resolving our exposure to claims arising from the financial crisis,” the bank said in its statement.
The law firm said that the class action was filed on behalf of purchasers of 48 offerings of preferred stock and bonds. The settlement will be reviewed by U.S. District Court Judge Sidney Stein in New York.