Citigroup to Pay $1 for Every $500 in Subprime Exposure It Hid
Citigroup has agreed to pay the SEC $75 million to settle charges that the bank hid exposure to more than $40 billion in subprime CDOs. (That works out to roughly $1 fine for every $500 worth of hidden exposure.) Read the full SEC complaint.
In what the New York Times called “an unusual move,” the SEC also charged one current and one former Citi executive for making the misstatements. Former CFO Gary Crittenden will pay $100,000 and Arthur Tildesley—formerly the head of investor relations—will pay $80,000. Neither Citi nor the execs admitted to any wrongdoing.
According to the SEC enforcement director Robert Khuzami, Citigroup had boasted in 2007 “of superior risk management skills in reducing its subprime exposure to approximately $13 billion,” when in fact, “billions more in CDO and other subprime exposure sat on its books undisclosed to investors.”
“We are pleased that we have reached agreement with the SEC to put this matter concerning certain 2007 disclosures behind us, and that the SEC is not charging Citi or any individual with intentional or reckless misconduct," said Citigroup spokeswoman Shannon Bell.
Citi execs have in the past said they were "deeply sorry" for ... not predicting the market collapse.
We’ve reported on some of Citi’s specific CDO dealings with a hedge fund called Magnetar, and some of the disclosure questions about those deals as well as others. For more on trouble Citi and others could be facing, check out our bank investigations cheat sheet.
Our Hottest Stories
- Segregation Now
- Beyond Ratings: More Tools Coming to Pick Your Doctor
- Rocky Mountain High or Reefer Madness? Legal Pot in Colorado Comes with Risks
- Even After Doctors Are Sanctioned or Arrested, Medicare Keeps Paying
- Long After Sandy, Red Cross Post-Storm Spending Still a Black Box
- Shake-Up Inside Forensic Credentialing Org
- The U.S. Government: Paying to Undermine Internet Security, Not to Fix It
- Brooklyn DA Moves to Free Man after Long-Buried Evidence Surfaces
- Labor Department Intervenes on Behalf of Hearst Interns
- How the Labor Department Has Let Companies Off the Hook for Unpaid Internships