Citigroup settlement is fair, SEC claims

13 September 2010

A $75 million settlement made with Citigroup after allegations of misleading investors over subprime mortgage products should be signed off, the Securities and Exchange Commission (SEC) has claimed.

According to the financial services industry regulator, the agreement is “fair, reasonable, adequate, in the public interest and should be approved".

The SEC filing comes in response to comments from US judge Ellen Segal Huvelle, who refused to agree to the pact until the body provided more information.

She questioned the size of the $75 million penalty and how the SEC could view it as appropriate for the extent of the errors made by the bank.

Citigroup allegedly misled investors by misquoting the size of its exposure to subprime mortgage products by $40 million.

In the documents, which were quoted by the Wall Street Journal, said: “The proposed $75 million penalty represents less than 0.3 per cent of Citigroup's revenue for the most recent quarter, and should not cause an undue negative financial impact on the company's business, or significant harm to current Citigroup shareholders.”

Citigroup used $45 billion of government funds to stay afloat during the global credit crisis as part of the Troubled Asset Relief Program.

By Jim Ottewill

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