NEW YORK — Citigroup said Wednesday it had agreed to pay $590 million to settle a suit by investors who accused the bank of misleading them on its subprime mortgage-based security losses in 2007-2008.
The agreement settled the four-year-old class-action suit that arose from the collapse of the US real estate market, which savaged the bank’s share price in part due to its heavy losses on collateralized debt obligations.
Investors who bought Citigroup shares between February 2007 and April 2008 accused the company of hiding its exposure to the CDO market, so they took heavy losses when it became public and the bank’s shares plummeted in value.
Citigroup denied the charges, but said it was agreeing to settle the lawsuit to avoid any more legal costs.
“This settlement is a significant step toward resolving our exposure to claims arising from the period of the financial crisis,” Citigroup said in a statement.
“Citi is fundamentally a different company today than at the beginning of the financial crisis. Citi has overhauled risk management, reduced risk exposures and, through our core businesses in Citicorp, we are focused on the basics of banking, leveraging our unique presence throughout the emerging and developed markets to serve our clients and the real economy.”
The suit said Citigroup masked losses on its holdings of CDOs in 2006 and 2007 as the property market was collapsing.
That helped keep its share price high, above $47 in October 2007, before it plunged to below $2.00 in early 2009 after some $50 billion in asset writedowns.
The settlement only covered a subset of the group of investors who originally sued. The suit previously included investors claiming losses between January 2004 and January 2009, but the claims outside those included in Wednesday’s settlement were dismissed by the judge.
New York law firm Kirby McInerney LLP, which represented investors in the suit, called the settlement “a significant recovery relating to the subprime/credit crisis.”
Trump-loving neo-Nazi charged with insanely violent threats against Latino woman
Federal agents arrested a Washington state man who allegedly threatened to "exterminate" Latinos as part of a race war he believed would be launched by President Donald Trump.
According to court documents, Eric Lin frequently praised Nazi leader Adolf Hitler online and sent multiple death threats against a woman in Miami and plotted to pay a man to beat her up, reported the Miami New Times.
"The time will come when Miami will burn to the ground — and every Latin Man will be lined up against a Wall and Shot and every Latin Woman Raped or Cut to Pieces," Lin wrote Aug. 8, according to investigators.
Republican senator heckled and booed during raucous town hall for blaming mass shootings on mental illness
Iowa Sen. Joni Ernst, who is up for reelection in 2020 and is among the Republican senators who is considered vulnerable, discussed the recent mass shootings in El Paso, Texas and Dayton, Ohio during a town hall event in her home state this week —and she was booed and heckled when she echoed President Donald Trump’s rhetoric and blamed “mental illness” for the killings.
Republicans likely to block ‘background checks’ after Trump’s abrupt reversal: report
After two mass shootings over one weekend, President Donald Trump signaled that he would be open to strengthening background checks.
He promptly dropped his resolve to sign gun regulations one week later when he said that there were already strong background checks on the books.
With the president's apparent reversal, Republicans in Congress also appear to be abandoning legislation, reports Politico.
“I really don’t see the dynamic having really changed there much,” Senate Homeland Security Chairman Ron Johnson told Politico. “I don’t anticipate we’re going to pass a federal red flag law."