“Citigroup, Inc. (C), the third-largest U.S. bank by assets, agreed to pay $730 million to settle claims it misled debt investors about its condition during the financial crisis.
“The deal would resolve a lawsuit by investors who bought Citigroup bonds and preferred stock from May 2006 through November 2008, the New York-based lender said yesterday in a statement. The accord requires court approval and would be covered by existing litigation reserves, the bank said.
“Citigroup is among the Wall Street firms still dealing with the fallout from the crisis, when the bank almost collapsed amid losses tied to subprime mortgages and took a $45 billion bailout. The company has repaid the rescue. Last year, the firm agreed to pay $590 million to settle a lawsuit brought by stock investors who said they’d been misled.
““At the time they were selling these securities, in reality Citigroup was effectively insolvent,” Steven Singer, a partner at Bernstein Litowitz Berger & Grossmann LLP who represented the debt investors, said in a phone interview. “They were presenting the company to be in substantially stronger financial position than it in reality was.””
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