NEW YORK (Reuters) - Citigroup Inc (C.N) 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.
Reporting By Karen Freifeld; Editing by Carol Bishopric, Bernad Orr