Citigroup to pay USD590m to settle subprime class action
Citigroup has agreed, subject to court approval, to settle a class action lawsuit brought on behalf of investors who purchased Citigroup common stock during the period 26 February 2007 through 18 April 2008.
Under the terms of the proposed settlement, Citi would pay a total of USD590m.
Plaintiffs in the class action had contended, among other things, that they were fraudulently misled over the scale of Citi’s exposure to toxic subprime mortgages by misstatements and omissions in the company’s disclosures during this period.
According to a statement released by Citigroup, the banking giant denies the allegations and is entering into this settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation. The amount to be paid under the proposed settlement is covered by Citi’s existing litigation reserves.
“Citi will be pleased to put this matter behind us. This settlement is a significant step toward resolving our exposure to claims arising from the period of the financial crisis,” says the statement. “Citi is fundamentally a different company today than at the beginning of the financial crisis. Citi has overhauled risk management, reduced risk exposures and through our core businesses in Citicorp, we are focused on the basics of banking, leveraging our unique presence throughout the emerging and developed markets to serve our clients and the real economy.”
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