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.