{"id":5227,"date":"2011-11-09T00:00:00","date_gmt":"2011-11-09T06:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2011\/11\/citigroups_285m_mortgagerelate"},"modified":"2022-04-06T10:46:01","modified_gmt":"2022-04-06T15:46:01","slug":"citigroups-285m-mortgagerelate","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/","title":{"rendered":"Citigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff"},"content":{"rendered":"

In Federal District Court today, Judge Jed S. Rakoff expressed concerns about the $285M securities settlement that Citigroup<\/a> had reached with the Securities Exchange Commission. The financial firm was accused selling $1B in high-risk mortgage-linked collateralized debt obligation that it allegedly knew were at risk of failing. A federal judge must approve the settlement. <\/p>\n

Rakoff is the same judge that wouldn\u2019t approve Bank of America<\/a>\u2019s $33M securities settlement with the SEC for allegedly misleading investors. He later approved a revised settlement of $150 million. <\/p>\n

At today\u2019s hearing over the Citigroup deal, Rakoff said the settlement raises issues of concerns about the SEC\u2019s enforcement practices. Approving the agreement would close the case on regulators\u2019 claims that the financial firm. <\/p>\n

While Rakoff has not yet made a decision about whether he will approve the settlement, he did question whether the SEC had any genuine desire to find out exactly what happened rather than just settling up. The SEC allows parties to settle without denying or admitting to any wrongdoing. Rakoff also raised concerns about the banks often break the promise they make when settling that they won\u2019t violate securities laws in the future. This is the fifth time that Citigroup has settled securities claims with the SEC over alleged civil fraud. Rakoff also raised questions about why the bank\u2019s settlement involves just a $95 million penalty when investors\u2019 are estimated to have lost $700 million on the CDO. <\/p>\n

Even though Citigroup didn\u2019t jump into subprime mortgage loan packaging, it got involved in the housing boom just as that was reaching its heights As the market collapsed, Citigroup sustained over $30 billion in losses, and the government had to bail the bank out twice.<\/p>\n

Last year, the financial firm consented to pay $75 million over allegations that it intentionally didn\u2019t notify investors that their investment in the subprime mortgage market were declining in value when the financial crisis hit. Citigroup has since reorganized its risk management function <\/p>\n

Citigroup\u2019s $285M Settlement<\/strong>
\nThe SEC claims Citigroup misled clients over a $1 billion derivatives deal involving Class V Funding III, which is a collateralized debt obligation. Not only did the financial firm select the portfolio but it also bet against it. Investors were not told of Citigroup\u2019s conflicting allegiances and they sustained huge losses. Meantime, Citigroup made $126 million from taking a short position against the CDO\u2019s assets, as well as another $34 million in fees. <\/p>\n

Judge in Citigroup Mortgage Settlement Criticizes S.E.C.\u2019s Enforcement<\/a>, NY Times, November 9, 2011<\/p>\n

Judge Dredd may scotch $285M Citi settlement: Attorney<\/a>, Investment News, November 8, 2011<\/p>\n

\nMore Blog Posts:<\/strong>
\nCitigroup to Pay $285M to Settle SEC Lawsuit Alleging Securities Fraud in $1B Derivatives Deal, Institutional Investor Securities Blog, October 20, 2011<\/p>\n

FDIC Objects to Bank of America\u2019s Proposed $8.5B Settlement Over Mortgage-Backed Securities<\/a>, Stockbroker Fraud Blog, August 30, 2011<\/p>\n

Bank of America and Countrywide Financial Sued by Allstate over $700M in Bad Mortgaged-Backed Securities<\/a>, Stockbroker Fraud Blog, December 29, 2010<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In Federal District Court today, Judge Jed S. Rakoff expressed concerns about the $285M securities settlement that Citigroup had reached with the Securities Exchange Commission. The financial firm was accused selling $1B in high-risk mortgage-linked collateralized debt obligation that it allegedly knew were at risk of failing. A federal judge must approve the settlement. Rakoff […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3820,3742,3752,3795],"tags":[],"class_list":["post-5227","post","type-post","status-publish","format-standard","hentry","category-citigroup","category-collateralized-debt-obligation","category-financial-firms","category-sec-settlements"],"yoast_head":"\nCitigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff — Investor Lawyers Blog — November 9, 2011<\/title>\n<meta name=\"description\" content=\"In Federal District Court today, Judge Jed S. Rakoff expressed concerns about the $285M securities settlement that Citigroup had reached with the — November 9, 2011\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Citigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff — Investor Lawyers Blog — November 9, 2011\" \/>\n<meta name=\"twitter:description\" content=\"In Federal District Court today, Judge Jed S. Rakoff expressed concerns about the $285M securities settlement that Citigroup had reached with the — November 9, 2011\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards & Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Citigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff — Investor Lawyers Blog — November 9, 2011","description":"In Federal District Court today, Judge Jed S. Rakoff expressed concerns about the $285M securities settlement that Citigroup had reached with the — November 9, 2011","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/","twitter_card":"summary_large_image","twitter_title":"Citigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff — Investor Lawyers Blog — November 9, 2011","twitter_description":"In Federal District Court today, Judge Jed S. Rakoff expressed concerns about the $285M securities settlement that Citigroup had reached with the — November 9, 2011","twitter_misc":{"Written by":"Shepherd Smith Edwards & Kantas, LLP","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/#article","isPartOf":{"@id":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/"},"author":{"name":"Shepherd Smith Edwards & Kantas, LLP","@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431"},"headline":"Citigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff","datePublished":"2011-11-09T06:00:00+00:00","dateModified":"2022-04-06T15:46:01+00:00","mainEntityOfPage":{"@id":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/"},"wordCount":534,"articleSection":["Citigroup","Collateralized Debt Obligations","Financial Firms","SEC Settlements"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/","url":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/","name":"Citigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff — Investor Lawyers Blog — November 9, 2011","isPartOf":{"@id":"https:\/\/www.investorlawyers.com\/blog\/#website"},"datePublished":"2011-11-09T06:00:00+00:00","dateModified":"2022-04-06T15:46:01+00:00","author":{"@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431"},"description":"In Federal District Court today, Judge Jed S. Rakoff expressed concerns about the $285M securities settlement that Citigroup had reached with the — November 9, 2011","breadcrumb":{"@id":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.investorlawyers.com\/blog\/citigroups-285m-mortgagerelate\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.investorlawyers.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Citigroup\u2019s $285M Mortgage-Related CDO Settlement with Raises Concerns About SEC\u2019s Enforcement Practices for Judge Rakoff"}]},{"@type":"WebSite","@id":"https:\/\/www.investorlawyers.com\/blog\/#website","url":"https:\/\/www.investorlawyers.com\/blog\/","name":"Investor Lawyers Blog","description":"Published By Investment Fraud Attorneys \u2014 Shepherd Smith Edwards & Kantas, LLP","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.investorlawyers.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431","name":"Shepherd Smith Edwards & Kantas, LLP","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","caption":"Shepherd Smith Edwards & Kantas, LLP"},"sameAs":["https:\/\/www.investorlawyers.com\/"]}]}},"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pedX9K-1mj","_links":{"self":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=5227"}],"version-history":[{"count":4,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5227\/revisions"}],"predecessor-version":[{"id":26584,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5227\/revisions\/26584"}],"wp:attachment":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=5227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=5227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=5227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}