 "Citigroup to pay $730 million to settle class-action lawsuit")
New York: Citigroup has agreed to pay $730 million to settle a class-action lawsuit that claimed investors were misled by the bank’s disclosures when they purchased its debt and preferred stock.
The investors’ purchases were made from May 11, 2006 through November 28, 2008. Citigroup denied the allegations and said in a statement late Monday that it has agreed to the settlement so it could get rid of further expenses and uncertainties that come along with drawn out litigation.
[caption id=“attachment_667519” align=“alignleft” width=“380”] In January, Citigroup announced a settlement with federal regulators related to its foreclosure practices. AFP[/caption]
“This settlement is another significant step towards resolving our exposure to claims arising from the financial crisis, and we look forward to putting this matter behind us,” the New York based company said in a statement.
Citigroup said that the proposed $730 million payment will be made from its existing litigation reserves. The settlement will be reviewed by Judge Sidney Stein in the US District Court for the Southern District of New York, where the lawsuit is pending.
Citigroup has been undergoing a transformation since Michael Corbat took over as CEO after former CEO Vikram Pandit resigned abruptly in October. Corbat’s first bold move was a decision, announced in December, to cut 11,000 jobs, close dozens of branches and trim the company’s consumer banking business in some countries.
In January, Citigroup announced a settlement with federal regulators related to its foreclosure practices. The bank allegedly took part in industry-wide practices that caused people to be foreclosed on illegally. It took a fourth-quarter charge of $305 million to cover its agreement with the Office of the Comptroller of the Currency and the Federal Reserve. Citigroup’s stock shed 5 cents to $46.19 in premarket trading on Tuesday.
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