Citigroup Agrees to Pay $285 million to settle SEC Enforcement Action on Mortgage-Related Securities but the Judge is Unhappy
- October 31, 2011 by Qui Tam
- Federal False Claims Act, Financial Industry
Citigroup agreed to resolve securities fraud charges in relation to its sale of mortgage-backed securities for a whopping payment of $285 million. Goldman Sachs and JP Morgan Chase & Co. settled similar claims with the SEC last year. At the time of sale, those securities produced $126 million in profit for Citigroup’s brokerage subsidiary and $34 million in fees. Citigroup will disgorge these funds plus $95 million in fines. Despite the hefty settlement, the assigned judge, Judge Jed Rackoff, assigned to the case, has called the settlement into question. As part of the proceedings to approve the settlement, he has questioned whether the settlement is sufficient, why no individuals were held individually responsible, and why there was no demand for admission of wrongdoing.
For more information see: http://www.nytimes.com/2011/10/20/business/citigroup-to-pay-285-million-to-settle-sec-charges.html?hp
http://www.reuters.com/article/2011/10/27/us-citigroup-sec-idUSTRE79Q5XD20111027