Citigroup paying US$75M to settle charges of misleading investors

WASHINGTON — Banking titan Citigroup Inc. is paying US$75 million to settle civil charges that it misled investors about its potential losses from subprime mortgages as the housing bust hit in 2007.

WASHINGTON — Banking titan Citigroup Inc. is paying US$75 million to settle civil charges that it misled investors about its potential losses from subprime mortgages as the housing bust hit in 2007.

The U.S. Securities and Exchange Commission announced the settlement with Citigroup on Thursday. It said the company repeatedly made misleading statements in calls with analysts and regulatory filings about the extent of its holdings tied to high-risk mortgages.

The bank had said the exposure was $13 billion or less. The SEC said it exceeded $50 billion.

Citigroup earned $2.7 billion in the second quarter of this year. So the penalty represents less than three per cent of its net income from April through June.

The settlement marked the second time in weeks that the agency reached an agreement on punitive action against a major Wall Street firm in connection with the financial crisis. Earlier this month, Goldman Sachs & Co. agreed to pay $550 million to settle civil fraud charges that it sold mortgage investments without telling buyers that the securities had been crafted with input from a client that was betting on them to fail.

Citigroup was one of the hardest-hit banks during the financial crisis. It received $45 billion from the $700-billion financial bailout — among the largest of government rescues.

A current and a former Citi executive also settled charges with SEC. Former Chief Financial Officer Gary Crittenden agreed to pay a $100,000 civil penalty. The former head of investor relations, Arthur Tildesley Jr., agreed to pay $80,000. Tildesley now is the head of cross marketing at the company.

New York-based Citigroup, Crittenden and Tildesley neither admitted nor denied the SEC’s charges. But they did agree to refrain from future violations of the securities laws.

“We are pleased that we have reached agreement with the SEC to put this matter concerning certain 2007 disclosures behind us, and that the SEC is not charging Citi or any individual with intentional or reckless misconduct,” the company said in a statement.

SEC enforcement director Robert Khuzami said in a statement that Citigroup boasted of its superior ability to reduce its subprime exposure, even in the fall of 2007 as the subprime mortgage market quickly weakened

“In fact, billions more in … subprime exposure sat on its books undisclosed to investors,” he said. “The rules of financial disclosure are simple — if you choose to speak, speak in full and not in half-truths.”

Of the $45 billion that Citigroup received from the government bailout, $25 billion was converted to a government ownership stake in the company last summer. The bank repaid the other $20 billion in December. The government has said it will sell the $25 billion in stock by the end of 2010.

The SEC said in its lawsuit that Citigroup left out two categories of assets tied to subprime mortgages when it reported its exposure of $13 billion. The company didn’t disclose until November 2007 that it had more than $40 billion of additional exposure from those categories, the SEC said. By then, the value of those assets had declined.

The SEC also said that Crittenden and Tildesley were repeatedly given information about the full extent of Citigroup’s potential losses from subprime mortgage securities.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

With a ban on sit-in dining once again in place, Las Palmeras owner Andre Lemus is gearing up for more takeout and delivery business. He has also applied to set up and outdoor patio, where dining is allowed under new restrictions. Photo by PAUL COWLEY/Advocate staff
Big interest in outdoor patios in Red Deer as sit-down dining banned again

City of Red Deer has tweaked its patio regulations to make it easier to get a permit

Artist Delree Dumont has painted an Indigenous mural at St. Joseph High School. (Contributed photo)
Indigenous mural painted on Red Deer high school walls

A new Indigenous mural now sits on the walls of St. Joseph… Continue reading

Jessica Swainson learned about improvisation and filmmaking at The Hub on Ross before its closure. She’s pictured here with her former Hub instructor Jason Steele. (Contributed photo).
Red Deer city, arts council are working to close ‘gaps’ left by The Hub’s closure

Could some popular Hub programs be resurrected at Northside Community Centre?

A vial of the Medicago vaccine sits on a surface. CARe Clinic, located in Red Deer, has been selected to participate in the third phase of vaccine study. (Photo courtesy www.medicago.com)
Red Deer clinical research centre participating in plant-based COVID-19 vaccine trial

A Red Deer research centre has been selected to participate in the… Continue reading

The Rogers logo is photographed in Toronto on Monday, September 30, 2019.  THE CANADIAN PRESS/Tijana Martin
Experts warn of economic implications from Rogers wireless outage

A massive wireless outage that has left customers of Rogers Communications Inc.… Continue reading

Finance Minister Chrystia Freeland delivers the federal budget in the House of Commons as Prime Minister Justin Trudeau looks on in Ottawa on Monday April 19, 2021. The federal government unveiled spending plans to manage the remainder of the COVID-19 crisis and chart an economic course for a post-pandemic Canada. THE CANADIAN PRESS/Sean Kilpatrick
Federal Budget 2021: Liberals bank on child care, business aid to prod growth

OTTAWA — The federal Liberals are betting that billions more in debt… Continue reading

University of Victoria rowing coach Barney Williams is photographed in the stands during the Greater Victoria Invitational at CARSA Performance Gym at the University of Victoria in Victoria, B.C., on Friday, November 29, 2019. The University of Victoria says Williams has resigned effective immediately. THE CANADIAN PRESS/Chad Hipolito
University of Victoria women’s rowing coach resigns by mutual agreement

VICTORIA — The University of Victoria says the head coach of its… Continue reading

Alberta NDP Leader Rachel Notley announces proposed new legislation to protect Alberta’s mountains and watershed from coal mining at a news conference in Calgary on Monday, March 15, 2021. A group of 35 scientists from the University of Alberta are urging the provincial government to rethink its plans for expanding coal-mining in the Rocky Mountains. THE CANADIAN PRESS/Jeff McIntosh
Alberta scientists urge adoption of bill that would protect against coal mining

EDMONTON — Some 35 scientists from the University of Alberta are urging… Continue reading

A driver shows identification to an Ottawa police officer as a checkpoint as vehicles enter the province from Quebec Monday April 19, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Quebec and Ontario impose travel restrictions to slow surging virus variants

Ontario and Quebec imposed new interprovincial travel restrictions on Monday amid growing… Continue reading

Education Minister Adriana LaGrange was in Red Deer on Friday to provide an update on the province's COVID-19 response in schools.
Photo by PAUL COWLEY/Advocate staff
LaGrange: Feedback needed to refine curriculum

As the Minister of Education my role has been guided by a… Continue reading

In this Feb. 24, 2020, photo, the Olympics rings are reflected on the window of a hotel restaurant as a server with a mask sets up a table, in the Odaiba section of Tokyo. The vaccine rollout in Japan has been very slow with less than 1% vaccinated. This of course is spilling over to concerns about the postponed Tokyo Olympics that open in just over three months.(AP Photo/Jae C. Hong, File)
Will Japanese Olympians be vaccinated ahead of the public?

TOKYO — The vaccine rollout in Japan has been very slow with… Continue reading

PSG's Kylian Mbappe, right, greets Bayern's Lucas Hernandez at the end of the Champions League, second leg, quarterfinal soccer match between Paris Saint Germain and Bayern Munich at the Parc des Princes stadium, in Paris, France, Tuesday, April 13, 2021. (AP Photo/Francois Mori)
PSG, Bayern the big names missing from Super League plan

DÜSSELDORF, Germany — The plan for the new Super League soccer competition… Continue reading

Most Read