Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Thursday, March 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

Citigroup’s $730M Deal With Bondholders OK’d

MANHATTAN (CN) - A federal judge has approved a $730 million settlement for bondholders who claimed that Citigroup concealed its exposure to $66 billion of subprime mortgage assets before the financial crisis.

Attorneys for Bernstein Litowitz Berger & Grossman say the settlement is the second-largest recovery in a securities class action brought on behalf of purchasers of debt securities.

The decision comes three weeks after U.S. District Judge Sidney Stein approved a $590 million settlement on behalf of Citigroup's shareholders represented by attorneys at Kirby McInerney.

"Certainly, the settlement does not represent the best possible recovery for plaintiffs; their damages experts estimate that to be approximately $3 billion," Stein wrote. "Nevertheless, a recovery of $730 million represents a substantial sum."

The class of bondholders had sued over 48 bond issuances that occurred between May 2006 and November 2008.

They claimed Citigroup downplayed its risk to about $166 billion of collaterized debt obligations, or CDOs, backed by subprime mortgages and overstating the credit quality of those assets.

Citigroup has denied wrongdoing in the agreement.

Attorneys are seeking a 20 percent of the settlement amount, or $146 million, but Stein has yet to rule on that issue. In the previous case, lawyers got $73.6 million in lawyers' fees from Stein, which was less than the $100.2 million they sought.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Loading...