Citigroup Inc. (C)’s $730 million settlement with investors who claimed the bank misled them about its condition during the financial crisis was granted final approval by a federal judge.
U.S. District Judge Sidney Stein ruled today that the settlement, announced in March, is “fair, reasonable and adequate” and allowed it to go forward.
The agreement resolves a suit by investors who bought Citigroup bonds and preferred stock from May 2006 through November 2008. Citigroup, the third-largest U.S. bank by assets, said at the time the settlement was announced that it would be covered by existing litigation reserves.
In March, Citigroup said it denied the investors’ allegations and that it agreed to the accord to avoid the cost and uncertainty of litigation.
“Citi is pleased to put this matter behind us,” Mark Costiglio, a bank spokesman, said today in an e-mail.
In the lawsuit, filed in federal court in Manhattan in 2008, the investors claimed Citigroup misled purchasers of 48 issues of its corporate bonds. Plaintiffs included the Louisiana Sheriffs’ Pension and Relief Fund, Minneapolis Firefighters’ Relief Association and the City of Philadelphia Board of Pensions and Retirement.
Citigroup’s bonds dropped as losses piled up during the collapse of the U.S. mortgage market. Its $4 billion of 10-year notes, issued in November 2007, slid as low as 79.7 cents on the dollar in 2008, according to data compiled by Bloomberg. The firm lost more than $29 billion in 2008 and 2009.
The case is In Re Citigroup Bond Litigation, 08-cv-09522, U.S. District Court, Southern District of New York (Manhattan).
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