Citigroup shells out $730 million to settle class-action suit

TUESDAY, MAR 19, 2013 12:35 PM UTC

Investors had claimed they were misled by the bank's disclosures when they purchased its debt and preferred stock

BY ASSOCIATED PRESS

(Credit: AP/Nick Ut)

NEW YORK (AP) — 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 Nov. 28, 2008.

Citigroup Inc. denied the allegations and said in a statement late Monday that it agreed to the settlement so it could get rid of further expenses and uncertainties that come along with drawn out litigation.

“This settlement is another significant step toward resolving our exposure to claims arising from the financial crisis, and we look forward to putting this matter behind us,” the New York 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 U.S. 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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