By Nate Raymond and Bernard Vaughan
NEW YORK Aug 1 A federal judge gave final
approval Thursday to a $590 million settlement by Citigroup Inc
that resolves a shareholder lawsuit accusing the bank of
hiding tens of billions of dollars of toxic mortgage assets.
"Although the $590 million recovery is a fraction of the
damages that might have been won at trial, it is substantial and
reasonable in light of the risks faced if the action proceeded
to trial," U.S. District Judge Sidney Stein in Manhattan wrote
in a 48-page opinion.
The settlement resolves claims by shareholders who purchased
Citigroup shares from February 2007 to April 2008 that the New
York-based bank misrepresented its exposure to securities known
as collateralized debt obligations that were tied to mortgage
Citigroup lost $27.68 billion in 2008. The lawsuit cited the
plunge in the company's stock price from $47.89 at the start of
the fourth quarter of 2007 to $2.80 by January 2009.
The settlement was announced last August.
But Stein, who had previously questioned the fairness of the
settlement, awarded substantially lower fees and expenses than
what was sought by the plaintiffs' lawyers.
The lead plaintiffs' lawyers will receive $73.6 million
instead of the $100.2 million they had requested.
While Stein said the lawyers "undoubtedly secured an
impressive recovery" for Citigroup investors, their request was
based on "significantly overstated" metrics.
Ira Press, a partner with Kirby McInerney who represents the
investors, did not immediately respond to a request for comment.
"Citi is pleased to put this matter behind us," Shannon
Bell, a spokeswoman for the bank, said Thursday.
The case is In re: Citigroup Inc Securities Litigation, U.S.
District Court, Southern District of New York, No. 07-09901.