Citigroup has agreed to pay a settlement of $285 million for misleading investors about complex mortgage products that helped fuel the financial crisis, the Securities and Exchange Commission said Wednesday.
Citi's principal US broker-dealer subsidiary was charged with selling a one billion dollar bundle of mortgage debt to investors that may have been designed to fail and which Citi bet against. "The CDO defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits," the SEC said in a statement. Citigroup's settlement payment will now be returned to investors. The SEC on Wednesday also charged Brian Stoker, "the Citigroup employee primarily responsible for structuring the CDO transaction."