Citigroup pays $75m sub-prime fine
30 Jul 2010
American bank Citigroup is paying a $75m (£48m) fine to settle charges that it misled investors over their exposure to sub-prime mortgages.
The deal with the US Securities and Exchange Commission (SEC) came about because Citi claimed exposure in 2007 was just $13bn, rather than the real figure of over $50bn.
"The rules of financial disclosure are simple - if you choose to speak, speak in full and not in half-truths," said SEC Enforcement Director Robert Khuzami.
Citi's former finance boss Gary Crittenden agreed to pay $100,000 and ex-investor relations chief Arthur Tildesley will stump up $80,000, as the watchdog said both knew about the full extent of the bank's exposures.
Goldman Sachs has also settled civil charges with the regulator this month. It was fined a record $550m for misleading investors in the marketing of a product based on sub-prime home loans.
Charges related to dealings in 2007 by Goldman trader Fabrice Tourre, who the SEC accused of encouraging investors to buy a package of securitised sub-prime mortgages called Abacus 2007-AC1.
But investors weren't told that the mortgages had been picked by US hedge fund Paulson, a partner of the bank, or that they had been chosen because they were likely to default.
