Citigroup has settled a class-action lawsuit with shareholders over how Citi managed subprime securities during the financial crisis, a second-order fraud unconnected to the actual fraud of securitization and knowingly selling the bad securities in the first place.
Citigroup said on Wednesday that it had agreed to pay $590 million to settle a class action lawsuit brought by shareholders who contended that they had been misled about the bank’s exposure to subprime mortgage debt on the eve of the financial crisis.
The shareholder lawsuit, originally filed in November 2007, alleged that former officers and directors of Citigroup had “concealed the company’s failure to write down impaired securities containing subprime debt” at a time when the collapse in the mortgage market made it apparent that banks including Citi would be adversely impacted. In late 2007, Citigroup wrote down billions of dollars on collateralized debt obligations tied to subprime debt, and reported a fourth-quarter loss of $9.83 billion that year.
In a statement on Wednesday, Citigroup, which denied the allegations, said: “Citi will be pleased to put this matter behind us. This settlement is a significant step toward resolving our exposure to claims arising from the period of the financial crisis.”
So this will provide a cash settlement to Citi shareholders who watched the stock lose half of its value between summer 2007 and winter 2008. The plaintiffs alleged that Citi knowingly misrepresented their exposure to doomed mortgage-backed securities through the CDO (collateralized debt obligation) market. In a statement, the plaintiff group complained of the difficulty to prove direct fraudulent intent and so they took the deal. Basically Citi mounted up enough lawyers and threw up enough of a smokescreen that the settlement became the only option. This is how a lot of these class-action suits end.
Citi had already paid the SEC $75 million in 2010 on this issue, based on a misleading valuation of their CDO exposure. They claimed they held $13 billion when the reality was over $50 billion. And this is unrelated to the $285 million settlement with the SEC over the selling of subprime CDOs without informing investors that they were taking the other side of the deal. That’s the one Judge Jed Rakoff opposed in court because, in part, Citi would not admit or deny wrongdoing in the settlement. The reason, of course, is that shareholder suits like this would be much harder to litigate if they admitted their culpability.
Unless something more is imposed on Citi, they will continue to buy their way out of their problems in dribs and drabs, with numbers that pale in comparison to the earnings they have made thanks to government programs. Citi will be just fine. And that’s the problem.




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“”Unless something more is imposed on Citi, they will continue to buy their way out of their problems in dribs and drabs, with numbers that pale in comparison to the earnings they have made thanks to government programs. Citi will be just fine. And that’s the problem.”"
Citi….. Cut their fucking balls off!!!!!
Too big to fail, too big to sue. Greedy and arrogant bastards.
$590 million? No problem. Ben’s printing the money now.
“Keyboard Alert”
And “Citi admitted no wrongdoing”……….
And worth every penny for that wrist slap. Ooooo that scary Obama DOJ.
Wow! Good thing they didn’t tear the tag off their mattress. They would have had to dig even deeper into the petty cash drawer.
Chump change.
Cut their fucking balls off………
Whose money did they use to settle with the shareholders?
Deposits?
Shareholders’ money?
Executive claw back?
If shareholders why cannot a shareholder today sue Citi for using their money to pay shareholders past?
This look like a recursive tort, using shareholders money to settle with shareholders.
Hey, I thought the SEC and DoJ were on permanent vacation.
…with a broken beer bottle.
I’m soooooo tired of this. I won;t vote for Obama again. Go Jill Stein. Go Frog Party.
Ribbitt.
Would that be irony, or just fucked up????
Barry keeps them locked in the basement for shakedown purposes and photo ops for the rubes who thinks he’s the one on their side.
What a fucking conundrum we find ourselves in. Obama lets these fuckers off the hook with a slap on the wrist but Rmoney would actually facilitate their criminal activities. Voting for third party with no chance of winning simply is not an option (yet) He is just as much of a goddamn warmonger as W ever was what with his running a murder incorporated around the world by drone, Gitmo is still open, the Pentagon budget continues to go up and up while social programs for the poor go on the chopping block…..Rmoney would attack Iran and who no who else…fuck. I guess we have to think of the SCOTUS and vote accordingly.