Bloomberg News

Citigroup Said to Agree to Almost $300 Million SEC Deal

October 19, 2011

(Updates with Credit Suisse role in third paragraph.)

Oct. 19 (Bloomberg) -- Citigroup Inc. has agreed to pay close to $300 million to resolve U.S. Securities and Exchange Commission claims that it misled investors about a financial product linked to risky mortgages, according to a person with direct knowledge of the matter.

The settlement is subject to approval by the SEC commissioners, who were scheduled to vote on it today, the person said, declining to be identified because the matter isn’t public. One Citigroup executive and an employee from another firm involved in the deal are also named in the SEC’s claims, according to the person.

Zurich-based Credit Suisse Group AG was the firm responsible for selecting assets for the collateralized debt obligation in question, known as Class V Funding III, the person said.

Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, and SEC spokeswoman Florence Harmon declined to comment. Steven Vames, a New York-based spokesman for Credit Suisse, declined to comment.

The agreement marks the latest in a string of SEC cases related to complex financial products tied to subprime mortgages that imploded as the housing market declined in 2007 and 2008. Goldman Sachs Group Inc. agreed to pay $550 million to resolve claims it failed to tell investors in a mortgage-linked product that a hedge fund betting against the CDO helped select the underlying assets. JPMorgan Chase & Co. agreed to pay $153.6 million to resolve similar claims related to its sale of a CDO in 2007.

The Wall Street Journal, which reported the proposed settlement earlier today, said Credit Suisse would likely pay less than $5 million to resolve the SEC’s claims.

--With assistance from Donal Griffin in New York and Elena Logutenkova in Zurich. Editors: Lawrence Roberts, Maura Reynolds

To contact the reporter on this story: Joshua Gallu in Washington at

To contact the editor responsible for this story: Lawrence Roberts at

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