Citigroup said Friday it had agreed to pay $590 million to settle a suit by investors who accused the bank of misleading them on its mortgage-based security losses in 2007-2008. The agreement settled the four-year-old class-action suit that arose from US real estate market collapse, which savaged the bank''s share price in part due to its heavy losses on collateralized debt obligations.
Investors who bought Citigroup shares between February 2007 and April 2008 accused the company of hiding its exposure to the CDO market, so they took heavy losses when it became public and the bank''s shares plummeted in value. Citigroup denied the charges, but said it was agreeing to settle the lawsuit to avoid any more legal costs.
"This settlement is a significant step toward resolving our exposure to claims arising from the period of the financial crisis," Citigroup said in a 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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