Citigroup Agrees to Pay $590 Million in Shareholder Suit

Citigroup agrees to pay $590 million in shareholder suitNEW YORK (AP) - Citigroup (C) has agreed to pay $590 million to settle legal claims by shareholders that its executives misled them about the bank's growing problems before the financial crisis.

The bank denied the allegations Wednesday, but said it agreed to the deal to eliminate the cost and uncertainty of litigating the class-action suit.

Plaintiffs say Citigroup executives kept mum between February 2007 and April 2008 about huge losses the bank faced on complex mortgage investments. When the problem was disclosed, they say, Citigroup's share price plunged. They blame the bank for their losses.

The case, filed in late 2007, was one of the first major lawsuits related to the toxic investments that fueled the financial crisis in 2008. It's also among the biggest proposed settlements of any crisis-related case.

In a statement, the bank said it is "pleased to put this matter behind us." It called the proposed settlement "a significant step" toward resolving the reams of litigation it faces as a result of the financial crisis.

Citigroup was one of the banks hit hardest by the crisis. As it faltered in the fall of 2008, the government made stronger banks take multi-billion dollar bailouts in part to mask Citi's weakness. Citi took direct bailouts totaling $45 billion and relied heavily on other emergency programs from the Federal Reserve. It has repaid the money with interest.

The bank said in its statement that it is "a fundamentally different company today than at the beginning of the financial crisis," having overhauled its risk management, reduced its risky investments and sold off non-core businesses.

Citigroup said it already has set aside enough money to cover the cost of the settlement.

The settlement is subject to court approval by U.S. district judge Hon. Sidney Stein in Manhattan.

Citigroup rose 35 cents to $29.69 in afternoon trading.


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17 Comments

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contactjohn

Jamie Demon, Lloyd Blankfein, Hank Greenberg, Tim Geithner, Larry Summers, Ben Bernake, Alan Greenspan, Milton Friedmann, and the others all have one thing in common... they are traitors to the people of the United States of America.

August 31 2012 at 3:05 AM Report abuse rate up rate down Reply
ga7smi

not nearly enough - where are the prision sentences? - I hope the company fails and takes down the rich bastards supporting it

August 31 2012 at 2:44 AM Report abuse rate up rate down Reply
djones

I hope that the Citigroup crashes and burns.

August 30 2012 at 8:42 PM Report abuse rate up rate down Reply
Mary Ellen

Funny. They talk about the bailout, but no one at political conventions dares to mentions how the banks screwed us.

August 30 2012 at 5:24 PM Report abuse rate up rate down Reply
wylecote

Let see, Citi has 3 Billion shares outstanding now after its reverse split from which there were 30 billion shares. So while the lawyers will get $200 million dollars the investors will get $0.013 per share to compensate them for $50.00 per share of loses. So when I lost $8,000 on that stock I will get a whopping 2 cents compensation.

August 30 2012 at 5:17 PM Report abuse rate up rate down Reply
coyote20112

can't say Obama this was filed on Bush's watch 2007-2008

August 30 2012 at 4:27 PM Report abuse +1 rate up rate down Reply
1 reply to coyote20112's comment
harlson

how gives a rat's ass whose watch it was
on it was CITI not an adminstration situation!

August 30 2012 at 7:52 PM Report abuse -1 rate up rate down Reply
Robert L Poluvatzick

Pay to who?

August 30 2012 at 3:55 PM Report abuse rate up rate down Reply
coachzone

Stay away from Citi credit cards, they have lowered my credit limit four times in the last year. Every time I get my debt down they lower my credit limit to within $200 of my balance like they are trying to get me to go over my limit even though I have never missed a payment or been late. I have not charged on the card and will be cancelling soon.

August 30 2012 at 12:29 PM Report abuse +2 rate up rate down Reply
1 reply to coachzone's comment
papadon.don

coach.... my experience with CITI is too horrible to post here.... my advice: get rid of CITI cc's FAST!!... they are vermin!!

August 31 2012 at 1:05 AM Report abuse rate up rate down Reply
YJLMFTBTMS

OH man, here comes tha rate increases again

August 30 2012 at 11:08 AM Report abuse rate up rate down Reply
morphiss7

How much are taxpayers paid back??????????? Oh yeah the taxpayer just gets scre--d !!! They dont get paid back. Thanks obama administration !!!

August 29 2012 at 3:39 PM Report abuse +1 rate up rate down Reply
2 replies to morphiss7's comment
tnjr

Why should taxpayers get paid? Citi paid back all their TARP money and the govt made double digit profits on it's investment.

August 30 2012 at 4:40 PM Report abuse rate up rate down Reply
1 reply to tnjr's comment
wylecote

What a laugh, the tax payers didn't get "double digit profit". The Fed gave them the money to pay the government back. Then we the taxpayers got screwed with QE one and two which has caused the gas prices to near quadruple, created real inflation of food prices up 300% since 2009. Have you seen the Wall Street Journal for 8/30/12 "Employee compensation at 60 year low".

August 30 2012 at 5:24 PM Report abuse +1 rate up rate down
harlson

You can't change stupid, however you can VOTE it OUT in November!

August 30 2012 at 7:50 PM Report abuse -1 rate up rate down Reply