NEW YORK, Thu Aug 1, 2013 — A federal judge gave final approval Thursday to a $590 million settlement by Citigroup Inc. that resolves a shareholder lawsuit accusing the bank of hiding tens of billions of dollars of toxic mortgage assets.
“Although the $590 million recovery is a fraction of the damages that might have been won at trial, it is substantial and reasonable in light of the risks faced if the action proceeded to trial,” U.S. District Judge Sidney Stein in Manhattan wrote in a 48-page opinion.
The settlement resolves claims by shareholders who purchased Citigroup shares from February 2007 to April 2008 that the New York-based bank misrepresented its exposure to securities known as collateralized debt obligations that were tied to mortgage investments.
Citigroup lost $27.68 billion in 2008. The lawsuit cited the plunge in the company’s stock price from $47.89 at the start of the fourth quarter of 2007 to $2.80 by January 2009.
The settlement was announced last August.