Citigroup Inc. is to pay $75 million to settle regulators' claims that it misled investors by understating holdings linked to subprime mortgages by billions of dollars as the housing crisis unfolded in 2007.
Citigroup made misstatements on earnings calls and in financial filings about assets it held that were tied to subprime loans, the Securities and Exchange Commission said in a complaint filed Thursday in federal court. Some disclosures omitted mention of more than $40 billion in investments, it said. Former Citigroup Chief Financial Officer Gary Crittenden agreed to pay $100,000 to settle charges that he did not disclose the bank's true exposure despite getting internal briefings.
"Even in late 2007, as the mortgage market was rapidly deteriorating, Citigroup boasted of superior risk management skills in reducing its subprime exposure," SEC Enforcement Director Robert Khuzami said. "The rules of financial disclosure are simple. If you choose to speak, speak in full and not half-truths."