Citigroup Inc. agreed to pay $590 million in cash to settle
a lawsuit by investors alleging the bank hid risks tied to toxic assets, the
plaintiffs said. U.S. District Judge
Sidney Stein in Manhattan, who is presiding over the suit, today granted
preliminary approval to the unopposed accord, and ordered a hearing for Jan.
15.
Citi, the third-biggest U.S. bank by assets, was accused by
investors of repackaging unmarketable collateralized debt obligations and
reselling them to itself to hide its exposure to the securities….
Citigroup began using the “CDO-related quasi-Ponzi scheme”
in 2006 to give the appearance that it had a healthy asset base, investors
alleged in court documents. The plaintiffs alleged Citigroup, including some of
its former senior officers and directors, “materially misrepresented” its
exposure to CDOs and were both aware of the size of Citigroup’s holdings and
their impairment before they were disclosed to the public....
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