U.S. District Judge Sidney Stein in Manhattan has approved a $730 million settlement between Citigroup Inc. and investors who had accused the bank of lying about the quality of investments in four-dozen bond and preferred stock-offerings. The decision comes the just weeks after Stein approved a similar $590 million settlement for Citigroup shareholders, according to Reuters.
Plaintiffs in the case, which include the Arkansas Teacher Retirement Systems and Louisiana Sheriffs’ Pension and Relief Fund, alleged that “Citigroup made materially untrue or misleading statements or omissions in public offering materials associated with 48 different bond issuances between May 2006 and November 2008,” according to court documents.
“The court finds the proposed class action settlement is fair, reasonable, and adequate,” Stein wrote in an opinion filed with the court on Aug. 20.
Following the decision, a spokesman for Citi said that the company is “pleased” with the court’s approval.
“We and our clients are extremely pleased that the court approved the settlement, which we believe is an outstanding result for investors,” John Browne, a partner with Bernstein Litowitz Berger & Grossmann who represented bondholders in the case, told The Wall Street Journal.
In March, Citi denied any wrongdoing and said they settled the suit to avoid the costs of prolonging litigation.
“This settlement is another significant step toward resolving our exposure to claims arising from the financial crisis, and we look forward to putting this matter behind us. Citi is a fundamentally different company today than at the beginning of the financial crisis. We have overhauled risk management and reduced risk exposures, while shedding assets and businesses that are not core to our strategy,” the bank said in a March 18 statement.
Despite this decision, a growing number of federal judges are closely scrutinizing—and sometimes rejecting—proposed settlements. In a growing number of cases, particularly those involving financial institutions, federal judges have started to scrutinize settlements much more closely than in the past, making a once very predictable and commonplace process a good deal more doubtful and complicated. Read more about these settlement practices here.