The U.S. Securities and Exchange Commission is defending its $75 million settlement with Citigroup, Inc (NYSE: C) on charges that it misled investors about potential losses from subprime mortgage calling the deal “fair and adequate”
The SEC made its case in a court filing on Wednesday to a federal judge who said last month that she was confused by the proposed settlement and wouldn’t approve it without additional information. The SEC said that the penalty of $75 million it proposed is “fair, adequate, reasonable and in the public interest.”
The settlement was first announced by the SEC in late July. The agency accused Citigroup of unintentional civil fraud charges and accused the bank of making misleading statements to analysts and in regulatory filings about the extent of its holdings which were tied to risky mortgages. Citigroup, Inc (NYSE: C) had initially said that the exposure was less than $13 billion and the SEC said that the exposure was more than $50 million.
The U.S. Securities and Exchange Commission said the proposed penalty “achieves a fair balance (of) providing compensation to injured shareholders without unfairly burdening current shareholders” of Citigroup. The $75 million represents less than 0.3 percent of Citigroup’s $22.07 billion in revenue in the second quarter of this year, the SEC noted. It “should not cause an undue negative financial impact on the company’s business, or significant harm to current Citigroup shareholders,” the agency said.
Citigroup Inc. (Citigroup) is a global diversified financial services holding company. The Company provides consumers, corporations, governments and institutions with a range of financial products and services. As of December 31, 2009, Citigroup had approximately 200 million customer accounts and did business in more than 140 countries. Citigroup operates through two primary business segments: Citicorp, consisting of its Regional Consumer Banking (RCB) businesses and Institutional Clients Group (ICG), and Citi Holdings, consisting of its Brokerage and Asset Management (BAM), Local Consumer Lending (LCL), and Special Asset Pool (SAP). In April 2010, Barclays PLC acquired Italian credit card business of Citibank International Bank plc. In May 2010, the Company announced the creation of a new Collateral Management Services unit within its Securities and Fund Services business.
Shares of Citigroup, Inc (NYSE: C) traded up 2.08% during mid-day trading on Thursday.
