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Citigroup settles lawsuit over federal securities law violations

By Agence France-Presse
Wednesday, May 29, 2013 17:41 EDT
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Citigroup has settled a lawsuit by the US Federal Housing Finance Agency over the sale of home mortgage-backed securities to government-backed lenders, a court document showed Wednesday.

According to the New York court filing, Judge Denise Cote said that both sides had reached an agreement that ends the lawsuit.

The terms of the settlement were not disclosed.

The FHFA sued Citigroup and 16 other financial institutions in September 2011 for violating federal securities laws in the sale of residential mortgage-backed securities to Fannie Mae and Freddie Mac.

The agency is the conservator of the two mortgage-finance giants that were seized by the federal government in 2008 as they veered toward bankruptcy amid the collapse of a housing price bubble.

The FHFA accused the 17 companies of misleading Fannie and Freddie about the credit-worthiness of the assets.

In its complaint against Citigroup, the FHFA accused the New York-based bank of providing “materially false” information about the quality of $3.5 billion in residential mortgage-backed securities sold to Fannie Mae and Freddie Mac.

A Citigroup spokeswoman declined to reveal the terms of the settlement, saying they were confidential.

“We are pleased to put the matter behind us,” she said.

A spokesperson for the FHFA was not immediately available to comment.

Citigroup in March announced it would pay $730 million to settle a class-action suit by bondholders related to the crisis.

The suit alleged Citigroup misled buyers of its bonds over its exposure to subprime mortgages and other high-risk securities ahead of and during the crisis, from May 2006 to November 2008.

Shares in Citi were up 1.1 percent at $52.35 in afternoon trade in New York that had the broader market down 0.5 percent.

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
 
 
 
 
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