Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Market
Citigroup To Pay $730M In MBS Lawsuit Settlement
NEW YORK (3/20/13)--Citigroup Inc. said Monday it has agreed to pay $730 million to settle lawsuits by investors in mortgage-backed securities (MBS) who claim Citi misled them in more than four dozen bond and preferred stock offerings over more than two years.

The National Credit Union Administration has filed similar lawsuits against securities dealers. This Citigroup case does not involve NCUA.  

Investors who purchased Citigroup's debt and preferred stock from 2006 through 2008 alleged in their lawsuit that the bank's disclosures contained omissions and misstatements (The New York Times March 18).

Plaintiffs in the lawsuit include the Arkansas Teacher Retirement Systems and Louisiana Sheriffs' Pension and Relief Fund. The agreement is the most recent to hit the biggest U.S. banks during a period in which investors are concerned about the extent of their potential legal costs (The Wall Street Journal March 18). 

The investors/plaintiffs had accused Citigroup of misleading them about loss-exposure on securities backed by home loans, understating loss reserves for high-risk residential mortgage loans, and claiming that risky assets were of high quality, said the Journal and Times.

Citigroup denied all allegations of wrongdoing and said it was settling to end litigation and to mitigate legal costs as well as minimize time spent in extended legal proceedings, according to the publications.

The proposed settlement would be the culmination of more than four years of litigation, the Times said.

NCUA has filed similar lawsuits against securities banks over MBS investments that contributed to the collapse of U.S Central FCU and Western Corporate FCU. NCUA has recouped more than $170 million for credit unions' share insurance fund by settling claims against Citigroup, Deutsche Bank Securities and HSBC (News Now Feb. 22).


RSS print
News Now LiveWire
Large CU stress testing on the agenda for the April @theNCUA open meeting http://t.co/2TUcnmCmPi
6 hours ago
#FinancialLiteracyMonth Test your college financial aid knowledge @nasfaa http://t.co/xgrDmHaw8W
14 hours ago
Join @theNCUA #NCUAchat with @KenWortheyJr on April 23 from 11am to 12pm EST http://t.co/TnNmfFh4Nl #FinancialLiteracyMonth
15 hours ago
Maine's patent troll bill has become law. Read more in Monday in @NewsNowLiveWire
18 hours ago
Wash. DFI discusses serving legal marijuana businesses with @NWCUA http://t.co/3kw79HJUYF
18 hours ago