The US Securities and Exchange Commission (SEC) has fined Citigroup $75m for misleading investors about the company's exposure to subprime mortgage-related assets.
The SEC also charged one current and one former executive of Citigroup for their roles in causing Citigroup to make the misleading statements in an SEC filing.
The SEC alleged that in response to intense investor interest on the topic, Citigroup repeatedly made misleading statements in earnings calls and public filings about the extent of its holdings of assets backed by subprime mortgages. Between July and mid-October 2007, Citigroup represented that subprime exposure in its investment banking unit was $13bn or less, when in fact it was more than $50bn.
Former CFO Gary Crittenden has agreed to pay $100,000, and former head of investor relations Arthur Tildesley, (currently the head of cross marketing at Citigroup) agreed to pay $80,000.
Robert Khuzami, director of the SEC’s division of enforcement, said: “Even as late as fall 2007, as the mortgage market was rapidly deteriorating, Citigroup boasted of superior risk management skills in reducing its subprime exposure to approximately $13bn. In fact, billions more in CDO and other subprime exposure sat on its books undisclosed to investors. The rules of financial disclosure are simple, if you choose to speak, speak in full and not in half-truths.”