NEW YORK - (Mealey's) A federal judge in New York on Aug.
29 granted preliminary approval of a $590 million settlement between
shareholders, Citigroup Inc. and certain of its current and former executive
officers and directors on claims that the defendants misrepresented Citigroup's
exposure to billions of dollars of risky collateralized debt obligations that
were backed by residential subprime mortgages (In re Citigroup Inc.
Securities Litigation, No. 07-9901, S.D. N.Y.).
U.S. Judge Sidney H. Stein of the Southern District of
New York issued the order preliminarily approving the settlement between
shareholders and Citigroup and current and former officers and directors
Charles Prince, Robert Druskin, Gary Crittenden, Thomas Maheras, Michael Klein,
David Bushnell and Robert Rubin (collectively, Citigroup defendants).
The settlement is subject to final approval.
The shareholders filed an amended complaint in the
District Court, alleging that Citigroup, four of its five divisions and 14
current and former officers and directors misrepresented Citigroup's business
and financial condition in violation of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and SEC Rule 10b-5.
In particular, the shareholders contend that the
defendants concealed Citigroup's exposure to billions of dollars of residential
subprime mortgage-backed securities.
The shareholders are represented by Roger W. Kirby, Ira
M. Press, Peter S. Linden, Henry Telias and Edward M. Varga III of Kirby
McInerney in New York; James Allen Sr. of Allen Brothers in Detroit; Kenneth
Gold of Saugatuck, Mich.; Lionel Glancy and Andrew Sohrn of Glancy Binkow &
Goldberg in Los Angeles; Ann K. Ritter of Motley Rice in Mount Pleasant, S.C.;
Alan L. Kovacs of Boston; and Kenneth A. Elan of New York.
The Citigroup defendants are represented by Brad S. Karp,
Richard A. Rosen, Susanna M. Buergel and Karen R. King of Paul, Weiss, Rifkind,
Wharton & Garrison in New York and Lawrence B. Pedowitz, George T. Conway
III, Jonathan M. Moses and John F. Lynch of Wachtell, Lipton, Rosen & Katz
in New York.
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