Citigroup Agrees to pay $285 Million to Settle Civil Fraud Charges

October 20 00:00 2011

New York, October 20 (RainbowNewsLine.com) – Citigroup (NYSE: C) has made a settlement to pay $285 million to settle civil fraud charges for having misled investors and buyers of a complex mortgage investment before the financial crisis. It is the biggest penalty that a Wall Street firm will pay since Goldman Sachs (NYSE: GS) paid $550 million to settle similar charges last year. In June, JPMorgan Chase & Co. paid $153.6 million to resolve similar charges.

Citigroup was alleged by the Securities and Exchange Commission to have bet against the investment in 2007 and made $160 million in fees and profits as investors lost millions. The cases against Citigroup involved complex investments called collateralized debt obligations which are securities backed by pools of other assets, such as mortgages. However, Citigroup neither admitted nor denied the allegations.

Citigroup said in a statement that “We are pleased to put this matter behind us and are focused on contributing to the economic recovery, serving our clients and growing responsibly.”

SEC said that Citigroup will pay back the fees and profit it earned along with $30 million in interest and a $95 million penalty. The money will be given back to the investors.

In 2008, Citigroup received $45 billion as part of the $700 billion government bailout, at the height of the financial crisis.

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