March 19, 2013
Citigroup (NYSE: C ) has agreed to pay $730 million to settle a class action lawsuit, with plaintiffs' lawyers calling this the second-largest settlement stemming from the subprime meltdown and financial crisis.
The agreement between the court-appointed bond counsel for the plaintiffs and Citi comes more than four years after the suit was originally brought before the U.S. District Court for the Southern District of New York. The proposed settlement is subject to court approval.
The "Citigroup Bond" class action suit was filed to represent investors who participated in any of Citi's 48 preferred stock and bond offerings from 2006 to 2008. The litigation claims Citi offered a series of bond and preferred stock during the years in question using disclosure documentation that contained "material misrepresentations and omissions regarding Citigroup's exposure to billions of dollars in mortgage-related assets," according to the plaintiffs' legal representatives.
In a statement, Citigroup on Monday said it "denies the allegations and is entering into this settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation." The $730 million settlement will be paid using Citi's existing litigation reserves.