Citigroup Inc. has agreed to pay $590 million to settle a shareholder lawsuit that accused it of hiding billions of dollars in subprime mortgage debt. The bank denied wrongdoing, instead saying the deal is “a significant step toward resolving our exposure to claims arising from the period of the financial crisis,” but this is still one of the biggest settlements related to the financial crisis.
Citigroup shareholders claimed that they suffered significant losses when the bank didn’t take writedowns on collateralized debt obligations, quite a few of which were backed by subprime mortgages. The lawsuit also claims that Citigroup hid the risks.
This has been a particularly high-profile case, according to the Wall Street Journal, partly because it received a $45 billion bailout from the U.S. government. District Judge Sidney Stein granted preliminary approval to the settlement on Wednesday, with a hearing for final approval scheduled for Jan. 15, 2013.
For more InsideCounsel coverage of the financial crisis, see below: