NEW YORK, Aug. 29 (UPI) -- U.S. banking giant Citigroup said Wednesday it had agreed to a $590 million payment to settle allegations that it hid bank losses from shareholders in 2007.
The class-action lawsuit said Citigroup "concealed the company's failure to write down impaired securities containing subprime debt."
Citigroup reported a fourth quarter loss of $9.83 billion in 2007, The New York Times reported Wednesday.
The losses came at the heels of billions of dollars in write-downs for collateralized debt obligations covering subprime mortgage loans.
Citigroup said Wednesday it "is fundamentally a different company today than at the beginning of the financial crisis."
Although the settlement has to be approved by Federal District Court Judge Sidney Stein in Manhattan, Citibank said it was "pleased to put this matter behind us."
Lawyers for the plaintiffs said their case had become less cut and dry. "Although the plaintiffs believe that the defendants knowingly or recklessly misrepresented Citigroup's CDO exposure and valuation, defendants have raised a host of factual and legal challenges increasing the uncertainty of a favorable outcome absent settlement," the lawyers from law firm Kirby McInerney said in a court filing.
Clearly, shareholders took a beating in year in question. Shares values fell by more than 50 percent between late February 2007 and mid-April 2008, starting at about $55 per share, the Times said.
Citigroup was then deeply involved in repackaging and selling securities and insuring their value. The bank had $70 billion of exposure to the subprime mortgage market between 2004 and 2008.
Regulators have combed through the re-packaged securities banks sold during this period. In a separate case, Citigroup agreed to pay $285 million to settle Securities and Exchange Commission charges that the bank was betting against bundles of securities that it had helped put together, although they were sold to investors as solid money-makers.