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Citigroup to Pay $1 for Every $500 in Subprime Exposure It Hid

Citigroup paid $75 million to settle charges that it hid exposure to more than $40 billion in subprime CDOs, and two executives were fined for their roles in the misstatements.

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.

As we have noted in our bailout tracker, Citi's subprime losses have been massive, and resulted in multiple taxpayer-financed bailouts—$45 billion overall.

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.

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