The ghosts of subprime do not give peace to the giants of American finance. The banking giant Citigroup announced last night that it has reached an out-of-court settlement to amicably end a collective cause. The agreement provides that the institute pays investors a total amount of 590 million dollars.
In the class action, Citigroup was accused of providing false information about its exposure to various financial derivative instruments – particularly those related to the notorious subprime mortgages – during the financial crisis of 2007-2008.
In particular, some former managers of Citigroup would have hidden missed write-downs on subprime securities when it was obvious that the collapse of the real estate market would also have an effect on Citigroup.
“We are happy to leave the story behind – writes the club -. The settlement is a significant step forward in resolving our exposure to lawsuits from the time of the financial crisis. Citigroup is now a very different company than it was at the start of the crisis”.
Citigroup also explains that it settled "only to eliminate the uncertainty and expense of further discussions."
The agreement gave relief to the Bank's share price, which yesterday gained 1,94% on Wall Street.
To learn more: Wall Street Journal.
