A federal judge approved Citigroup Inc.'s revised pact with federal securities regulators to resolve allegations that the bank misled investors about $39 billion in subprime-mortgage assets it held.
Judge Ellen Segal Huvelle signaled last month that she would approve a revised deal, which imposes additional governance standards and disclosure policies on Citigroup's earnings releases.
Under the new pact with the Securities and Exchange Commission, Citigroup will still pay the originally agreed-upon $75 million fine. It also agreed to maintain disclosure and earnings committees for three years. Executives, including the bank's chief executive and chief financial officer, would also be required to sign statements attesting to the accuracy of earnings statements and scripts used during earnings conference calls. Any changes to the bank's disclosure policies would have to be approved by an independent consultant who has SEC approval.
The judge had said she struggled to find the fairness of the original pact. She said she didn't think a $75 million penalty alone, particularly for a large financial institution, would deter others from misleading investors. At a hearing last month, she said that, without including remedial measures to the bank's disclosure policies and practices, the pact would be "meaningless."
During court hearings, the SEC attributed the bank's alleged failure to report subprime-mortgage exposure to a breakdown in disclosure policies at the bank. The SEC also sued two executives, who agreed to pay less than $800,000 to settle the case without admitting or denying wrongdoing.
