Citigroup Inc. (NYSE:C) has agreed to pay $730 million to close the class-action lawsuit which claims that investors were misguided by the bank’s disclosures while purchasing its debt and preferred stock. The investors’ purchases were made from May 11, 2006 through November 28, 2008. However, Citigroup Inc. (NYSE:C) did not agree with these allegations, and to avoid the further expenses and doubt agreed to make settlement.
The plaintiffs in the case included the Arkansas Teacher Retirement Systems and the Louisiana Sheriffs’ Pension and Relief Fund.
“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.
The company stated that the payment of the decided amount of $730 million will be made from its current litigation reserves. The reviewing authority over the settlement will be Judge Sidney Stein in the U.S. District Court for the Southern District of New York, where the lawsuit is pending.
Since the arrival of new CEO Michael Corbat, after the resignation of CEO Vikram Pandit, Citigroup Inc. (NYSE:C) has been experiencing a major transformation. In December Corbat took an aggressive decision of slashing 11,000 jobs, shut down dozens of branches and cut the company’s consumer banking business in some countries.
Further, in January the bank announced a settlement with federal regulators associated to its foreclosures practices. There were allegations drawn on the bank that it was a part of an industry wide practice that caused people to be foreclosed illegally. The bank agreed to settle charge by paying $305 million with the Office of the Comptroller of the currency and the Federal Reserve.
Citigroup is one of the many Wall Street firms who are still dealing with the decline caused by the crisis. The Bank almost warped in the wake of losses related to subprime mortgages and took a $45 billion bailout.
In August last year, Citigroup Inc. (NYSE:C) agreed to pay $590 million to settle a lawsuit files by the stick investors who were misled as per the lawsuit. In the lawsuit, the investors charged the company that it has hidden its exposure to collateralized debt obligation market in order to increase its share price. As a result, the investors suffered heavy losses after losses were revealed in public and the shares of Citigroup Inc. (NYSE:C) were deep in red.
Citigroup Inc. (NYSE:C) then also repeated the same version and said that it was settling to avoid any further legal expenses.