UPDATE 1-Citigroup agrees to pay $730 mln to settle with investors

Mon Mar 18, 2013 7:17pm EDT

By Karen Freifeld

NEW YORK, March 18 (Reuters) - Citigroup Inc has agreed to pay $730 million to settle a class action lawsuit on behalf of investors who said they were misled by the company's disclosures.

Purchasers of the bank's debt and preferred stock between 2006 and 2008 claimed there were misstatements and omissions in the disclosures, Citigroup said in a statement announcing the proposed settlement.

The investors accused the bank of bank understating loss reserves for its high-risk residential mortgage loans and falsely stating risky assets were of high credit quality, according to Bernstein Litowitz Berger & Grossman, a law firm that represented pension funds and other investors in the case.

The bank denied the allegations and said it was entering into the settlement to end the litigation. It said the settlement would be covered by 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 class action was filed on behalf of purchasers of 48 offerings of preferred stock and bonds, the law firm said.

The proposed settlement, which will be reviewed by U.S. District Court Judge Sidney Stein in New York, comes after more than four years of litigation.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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