New York: Citigroup Inc., the third largest US bank by assets, agreed to pay $730 million to settle investor claims that it made misstatements and omissions in disclosures before the financial crisis.

The deal would resolve a class-action lawsuit brought by investors who bought Citigroup debt and preferred stock from May 2006 through November 2008, the New York-based lender said on Tuesday in a statement. The accord requires court approval and would be covered by existing litigation reserves, the bank said.

Citigroup is among Wall Street firms still dealing with the fallout from the financial crisis, when the bank almost collapsed amid losses tied to subprime mortgages and took a $45 billion bailout. The company’s stock slid 89% in 2008 through 2009 as the firm lost more than $29 billion.

Citi is a fundamentally different company today than at the beginning of the financial crisis, it said in the statement. “We have overhauled risk management and reduced risk exposures, while shedding assets and businesses that are not core to our strategy."

The lawsuit was filed in federal court in Manhattan in 2008, with investors claiming Citigroup misled purchasers of 48 issues of its corporate bonds.

Citigroup materially understated the loss reserves for its portfolio of high-risk residential mortgage loans, a law firm representing investors, Bernstein Litowitz Berger and Grossmann Llp, said in a statement. It wasn’t until November 2008, when the bank received substantial government assistance, that investors learned the full truth about Citigroup’s financial condition.

In 2010, US district judge Sidney Stein denied part of a motion by Citigroup to dismiss the case, which claimed the firm misrepresented liabilities from toxic mortgage-backed securities. Stein threw out claims that involved alleged lack of disclosure about auction-rate securities and part of the plaintiffs’ case related to structured investment vehicles. The firm still denies the allegations and reached the settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation, it said on Tuesday. The company has repaid the taxpayer bailout. Citigroup has climbed 17% to $46.24 this year, outpacing an 11% increase in the broader KBW Bank Index of 24 companies. The stock was little changed in after-hours trading, following the settlement’s announcement.

The case is: In Re Citigroup Bond Litigation, No. 08-CV- 9522, US District Court, Southern District of New York (Manhattan).

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