Citigroup Inc. will pay $590 million to settle a four-year-old, 547-page lawsuit brought by shareholders that accused the lender of intentionally hiding billions of dollars in toxic mortgage assets.
According to a Reuters report, U.S. District Judge Sidney Stein in Manhattan gave a preliminary approval of the settlement. A hearing has been scheduled for Jan. 15, 2013, to consider final approval of the deal.
In the lawsuit, Citigroup's shareholders accused the company of not taking timely write-downs on collateralized debt obligations while enacting self-dealing transactions that hid the risks within its mortgage assets, which included many subprime loans. As part of the settlement, Citigroup denied any wrongdoing. However, it issued a statement saying that the settlement was a ‘significant step toward resolving our exposure to claims arising from the period of the financial crisis.’
The company adds that the $590 million to cover the agreement will come from its existing reserves.
