U.S. banking giant Citigroup Inc. (NYSE:C) Tuesday announced it has reached a settlement in a class action suit it was facing concerning its disclosure in the months leading up to the financial crisis.
The deal, which is subject to court approval, would settle a class action brought on behalf of investors who purchased Citigroup debt and preferred stock between May 2006 and the end of November 2008 with the bank agreeing to pay a total of US$730 million.
Plaintiffs in the class action argued, among other things, that they were misled by misstatements and omissions in the company’s disclosures during this period. Citigroup continues to deny those allegations, and says it is entering into this settlement “solely to eliminate the uncertainties, burden and expense of further protracted litigation”.
The bank says that the payout under the proposed settlement is covered by its existing litigation reserves. “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,” it said in a statement.
“Citi is a fundamentally different company today than at the beginning of the financial crisis. We have overhauled risk management and reduced risk exposures, while shedding assets and businesses that are not core to our strategy. We are completely focused on our clients and generating consistent, high-quality earnings,” it added.
The proposed settlement will be reviewed by Judge Sidney Stein in the U.S. District Court for the Southern District of New York, where the class action is pending.