Citigroup to Pay $25 Million to Settle MBS Lawsuit

Citigroup (NYSE: C) has agreed to pay nearly $25 million to settle claims that it misled investors about the risk of certain mortgage-backed securities, according to Reuters.

Citigroup's Institutional Clients Group was sued in 2008 by the Ann Arbor Employees' Retirement System and Greater Kansas City Laborers Pension Fund on behalf of investors in two mortgage-backed securities trusts.

The investors accused Citi of understating the risk of default and of lying about the underwriting and appraisal standards on residential loans that were packaged into two mortgage-backed securities trusts, Reuters reported.

Citi settled for pennies on the dollar. The settlement would pay roughly $13.25 for each $1,000 in initial face value of the two trusts, which were valued at about $1.8 billion, Reuters reported.

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