One of the nation's largest banks will shell out more than half-a-billion dollars in a settlement with investors over toxic mortgage assets.
A federal district court has finalized a settlement that will see Citigroup pay shareholders $590m over securities backed by subprime mortgages. Plaintiffs in the class action alleged that the bank misled investors on subprime securities, and that shareholders who bought Citigroup stock between February 26, 2007 and April 18, 2008 paid an inflated price.
In approving the settlement, Judge Sidney Stein also whittled down the fees requested by attorneys representing the class action. Plaintiffs' lawyers had initially requested $97.5m in fees, which Stein cut down to $70.8m.
Stein said the settlement represented a good outcome for investors, as it avoided the risk of taking the case to trial.
"Although the $590 million recovery is a fraction of the damages that might have been won at trial, it is substantial and reasonable in light of the risks faced if the action proceeded to trial," Stein said in his ruling.
The settlement comes less than a week after the FHFA revealed it had reached an $800m settlement with Swiss banking giant UBS over the sale of bad MBS.