Citigroup Inc. agreed to pay 590 million dollars in a settlement Wednesday of a lawsuit filed by investors who accused the bank of hiding toxic assets during the 2008 financial crisis.
Citigroup continues to deny the allegations, saying that it agreed to the settlement to rid itself of the lawsuit and was paying the 590 million dollars out of its litigation reserves.
A Manhattan federal district judge presiding over the lawsuit gave preliminary approval Wednesday to the settlement.
Citigroup, which nearly collapsed during the 2008 Wall Street meltdown and accepted 45 billion dollars in federal bailout money at the time, was accused in the lawsuit of hiding its exposure to securities based on high-risk mortgages.
The plaintiffs alleged in court documents that Citigroup "knowingly or recklessly" overvalued its holdings of mortgage-backed securities and understated the risk of those bonds, by allegedly repackaging some financial instruments and selling some assets to itself to conceal the risks.
The class-action lawsuit represented investors who bought Citigroup common stock from February 26, 2007-April 18, 2008.
"Citi is fundamentally a different company today than at the beginning of the financial crisis," the bank said in a statement. "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."
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