News Column

FDIC Announces Settlement With Citi Entities

July 14, 2014



WASHINGTON, July 14 -- The Federal Deposit Insurance Corporation issued the following news release:

The Federal Deposit Insurance Corporation (FDIC), as receiver for three failed banks, has announced a $208,250,000.00 settlement with Citigroup Global Markets Inc.; Citigroup Financial Products Inc.; CitiMortgage, Inc.; Citigroup Mortgage Loan Trust Inc.; and Citicorp Mortgage Securities, Inc. (Citi Entities) of the receiverships' federal and state securities law claims based on misrepresentations in the offering documents for 24 residential mortgage-backed securities (RMBS) purchased by the failed banks. The settlement funds will be distributed among the receiverships for the failed Citizens National Bank, Strategic Capital Bank, and Colonial Bank.

As receiver for failed financial institutions, the FDIC may sue professionals and entities whose conduct resulted in losses to those institutions in order to maximize recoveries. From May 2012 to September 2012, the FDIC as receiver for the failed banks filed eight lawsuits against the Citi Entities and other defendants for violations of federal and state securities laws in connection with the sale of RMBS. As of January 31, 2014, the FDIC has authorized lawsuits based on the sale of RMBS to a total of eight failed institutions and has filed 19 lawsuits seeking damages for violations of federal and state securities laws.

Citizens National Bank and Strategic Capital Bank were each placed into receivership on May 22, 2009; Colonial Bank was placed into receivership on August 14, 2009.

Additional background on Professional Liability Suits (http://www.fdic.gov/bank/individual/failed/pls/)

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Source: Targeted News Service


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