Citigroup will pay $75 million to settle SEC 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 SEC said in a complaint at U.S. District Court in Washington Thursday. Some disclosures omitted more than $40 billion in investments, it said.
Former CFO Gary Crittenden agreed to pay $100,000 to settle allegations that he didn’t disclose the bank’s exposure despite receiving internal briefings. Arthur Tildesley, Citigroup’s former head of investor relations, will pay $80,000 to settle claims he helped draft disclosures that misled investors, the SEC said. He now heads cross-marketing, according to the agency.
Neither the bank nor Messrs. Crittenden and Tildesley admitted or denied the allegations in settling.
“Mr. Crittenden is pleased to have resolved this matter,” said John Carroll, an attorney for Mr. Crittenden at law firm Skadden, Arps, Slate, Meagher & Flom. “The settlement does not establish liability for purposes of any other proceeding.”
The bank is also pleased to “put this matter concerning certain 2007 disclosures behind us,” spokeswoman Shannon Bell said in a statement. “Neither Citi nor Mr. Tildesley was charged with intentional or reckless misconduct. Mr. Tildesley is a highly valued employee of Citi and is making significant contributions to the company.”
Mr. Tildesley’s attorney, Mark Stein at Simpson Thacher & Bartlett, said he couldn’t immediately comment.
Citigroup executives including former CEO Charles Prince were questioned at an April hearing by the Financial Crisis Inquiry Commission about whether the bank fully disclosed potential losses tied to subprime loans. The congressionally appointed panel released documents showing Citigroup publicly told investors in October 2007 that its exposure was $13 billion. At the same time, board members were briefed on an additional $43 billion of risk.