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Banking and Finance

Judge Preliminarily OKs $590M Citigroup Securities Class Action Settlement

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.

Amended Complaint

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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