$590M Citigroup Investor Lawsuit Approved By Federal Judge

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In 2007, shareholders filed a class action lawsuit against Citibank. Citibank is a financial services company based in Manhattan, New York. Citibank has been in business for more than 200 years and operates in 160 countries with 200 million customer accounts. The indictment states that Citigroup misrepresented its mortgage assets. Defense lawyers said that the company under-valued its liabilities and over-valued its assets.
Federal Judge Sidney H. Stein approved the $590 million lawsuit in the United States District Court of the Southern District of New York. Simply put, Citigroup admitted to over-stating the value of its mortgage loan portfolio. According to court documents, the company violated the Securities Exchange act of 1934.
Investors who purchased Citigroup’s common stock during February 26 2007 through April 18 2008, paid too much money for the stock. The plaintiffs $590 million settlement is a small amount of the damages. However, if the investors had decided to go to trial for a larger settlement, there was a possibility that they might loose the case.
Citigroup invested money in complex financial instruments called Collateralized Debt Obligations (CDO). The company owned $50 billion in CDO notes and then the 2008 financial crisis reduced the value of those notes significantly. The price per share of Citigroup’s stock plunged and the investors blamed the bank.  The government and the Federal Reserve bailed Citigroup out with $45 billion of taxpayers money.
According to a report by The Securities and Exchange Commission dated October 19 2011, Citigroup was charged with fraud and misleading investors. The company agreed to a settlement of $285 million with the SEC and the funds were returned to investors.
Clearly, investors need to be more cautious when making financial decisions with Citigroup. Citigroup is saying that they are “putting this matter behind them.” However, thousands of people have been negatively impacted because the company misrepresented its assets.
In 2007, shareholders filed a class action lawsuit against Citibank. Citibank is a financial services company based in Manhattan, New York. Citibank has been in business for more than 200 years and operates in 160 countries with 200 million customer accounts. The indictment states that Citigroup misrepresented its mortgage assets. Defense lawyers said that the company under-valued its liabilities and over-valued its assets.
Federal Judge Sidney H. Stein approved the $590 million lawsuit in the United States District Court of the Southern District of New York. Simply put, Citigroup admitted to over-stating the value of its mortgage loan portfolio. According to court documents, the company violated the Securities Exchange act of 1934.
Investors who purchased Citigroup’s common stock during February 26 2007 through April 18 2008, paid too much money for the stock. The plaintiffs $590 million settlement is a small amount of the damages. However, if the investors had decided to go to trial for a larger settlement, there was a possibility that they might loose the case.
Citigroup invested money in complex financial instruments called Collateralized Debt Obligations (CDO). The company owned $50 billion in CDO notes and then the 2008 financial crisis reduced the value of those notes significantly. The price per share of Citigroup’s stock plunged and the investors blamed the bank.  The government and the Federal Reserve bailed Citigroup out with $45 billion of taxpayers money.
According to a report by The Securities and Exchange Commission dated October 19 2011, Citigroup was charged with fraud and misleading investors. The company agreed to a settlement of $285 million with the SEC and the funds were returned to investors.
Clearly, investors need to be more cautious when making financial decisions with Citigroup. Citigroup is saying that they are “putting this matter behind them.” However, thousands of people have been negatively impacted because the company misrepresented its assets.

 

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