Citigroup to settle negligence charges

Federal regulators late on Wednesday charged a unit of Citigroup with negligence after they found it had sold $1bn worth of financial products linked to the flagging 2007 housing market.

The bank’s Global Markets division had misled investors when it failed to inform them that the $1bn investment was doomed for failure, the SEC said.

Director of the SEC’s enforcement unit, Robert Khuzami, said: “Investors were not informed that Citigroup had decided to bet against them and had helped select the assets that determined who won or lost.”

Following the ruling, Citigroup agreed to pay $285m to settle the claims. It steps into the footsteps of Goldman Sachs and JP Morgan Chase which agreed to pay $550m and $153.6m respectively earlier this year.