Citigroup to pay $590 million to settle investor suit

Source: Yahoo news

Citigroup said Wednesday it had agreed to pay $590 million to settle a suit by investors who accused the bank of misleading them on its subprime mortgage-based security losses in 2007-2008.

The agreement settled the four-year-old class-action suit that arose from the collapse of the US real estate market, which savaged the bank's share price in part due to its heavy losses on collateralized debt obligations.

Investors who bought Citigroup shares between February 2007 and April 2008 accused the company of hiding its exposure to the CDO market, so they took heavy losses when it became public and the bank's shares plummeted in value.

Citigroup denied the charges, but said it was agreeing to settle the lawsuit to avoid any more legal costs.

Read more: http://news.yahoo.com/citigroup-pay-590-million-settle-investor-suit-163603190.html