Judge plans to approve Citigroup settlement
washington — A federal judge said Friday that she planned to approve the government’s $75-million settlement with Citigroup Inc. over charges that it misled investors about billions in potential losses from subprime mortgages.
U.S. District Judge Ellen Segal Huvelle said she first wanted assurances that Citigroup would maintain new policies it adopted to ensure it would avoid such violations in the future. Citigroup and the Securities and Exchange Commission, which brought the charges, agreed to add such assurances to the settlement.
The SEC had accused Citigroup of making misleading statements about its holdings tied to high-risk mortgages. Citigroup had said they were $13 billion or less; the SEC said they exceeded $50 billion.
Huvelle had initially declined in August to approve the deal. She questioned why shareholders should be punished for the alleged misconduct of the bank’s executives.
On Friday, she said she could approve the settlement in a few weeks, once the assurances were added.
SEC attorneys said the commission would have to approve the changes.
The $75 million that Citigroup is paying represents less than 0.3% of its $22.07 billion in revenue in the second quarter of this year.
The SEC and Citigroup agreed that the money would be distributed to shareholders who were harmed by the alleged violations — but not to any Citigroup executives or directors who were in place at the time in 2007.
Former Chief Financial Officer Gary Crittenden settled related charges with the SEC by agreeing to pay a $100,000 civil penalty. The former head of investor relations, Arthur Tildesley Jr., agreed to pay $80,000. Tildesley now is head of cross marketing at Citigroup.