LAWSUITS NEWS & LEGAL INFORMATION
Citigroup Agrees $590M Securities Lawsuit Settlement
This is a settlement for the Securities/Stock Fraud lawsuit.
New York, NY: Citigroup has agreed a securities class action settlement involving a $590 million payout to shareholders who alleged they had been misled about the bank's exposure to subprime mortgage debt before the financial crisis.
Filed in November 2007, the lawsuit contends that Citigroup together with some of its former senior executives and directors failed to disclose the bank's huge holdings in securities known as collateralized debt obligations (CDOs) that were tied to mortgage securities until November 2007, when it took a multibillion-dollar write-down on the CDOs. Citigroup later wrote down the CDOs by tens of billions of dollars more.
According to the lawsuit, Citigroup had previously tried to hide the deteriorating value of its holdings through improper accounting practices. "Citigroup used inflated, unreliable and unsupportable marks to keep its CDO-related quasi-Ponzi scheme alive and to give the appearance of a healthy asset base," the lawsuit states.
The plaintiffs included pension funds in Colorado, Ohio and Illinois. The lawsuit was led by former employees and directors of Automated Trading Desk who received Citigroup shares when they sold the electronic trading firm to the bank in July 2007. The proposed settlement, which was given preliminary approval by Judge Sidney Stein of the U.S. District Court in New York, covers investors who bought Citi shares from Feb. 26, 2007, through April 18, 2008. Shares of Citigroup traded as high as $55 in the summer of 2007. By spring of 2008, its stock price had tumbled by half.
Published on Aug-31-12
Filed in November 2007, the lawsuit contends that Citigroup together with some of its former senior executives and directors failed to disclose the bank's huge holdings in securities known as collateralized debt obligations (CDOs) that were tied to mortgage securities until November 2007, when it took a multibillion-dollar write-down on the CDOs. Citigroup later wrote down the CDOs by tens of billions of dollars more.
According to the lawsuit, Citigroup had previously tried to hide the deteriorating value of its holdings through improper accounting practices. "Citigroup used inflated, unreliable and unsupportable marks to keep its CDO-related quasi-Ponzi scheme alive and to give the appearance of a healthy asset base," the lawsuit states.
The plaintiffs included pension funds in Colorado, Ohio and Illinois. The lawsuit was led by former employees and directors of Automated Trading Desk who received Citigroup shares when they sold the electronic trading firm to the bank in July 2007. The proposed settlement, which was given preliminary approval by Judge Sidney Stein of the U.S. District Court in New York, covers investors who bought Citi shares from Feb. 26, 2007, through April 18, 2008. Shares of Citigroup traded as high as $55 in the summer of 2007. By spring of 2008, its stock price had tumbled by half.
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