Under the terms of the proposed settlement, Citi would pay a total of $590m. Plaintiffs in the class action had contended, among other things, that they were fraudulently misled by misstatements and omissions in the company’s disclosures during this period (accusing it of hiding tens of billions of dollars of toxic mortgage assets). Citigroup denies the allegations and is entering into this settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation. The amount to be paid under the proposed settlement is covered by Citi’s existing litigation reserves.
The company released the following statement: 'Citi will be pleased to put this matter behind us. This settlement is a significant step toward resolving our exposure to claims arising from the period of the financial crisis.
'Citi is fundamentally a different company today than at the beginning of the financial crisis. Citi has overhauled risk management, reduced risk exposures and through our core businesses in Citicorp, we are focused on the basics of banking, leveraging our unique presence throughout the emerging and developed markets to serve our clients and the real economy'.
The proposed settlement will be reviewed by the Hon. Sidney Stein in the United States District Court for the Southern District of New York, where the class action is pending.