Citigroup will pay a fine of $75 million to US market regulator SEC to settle charges that it misled investors about its exposure to risky mortgage assets during the housing market slump in 2007.
This is the third time this year that SEC has slapped charges against a Wall Street major, mainly related to the financial meltdown, after Goldman Sachs and Bank of America.
Citi made misleading statements about its exposure to sub-prime mortgages between July 20 and November 4, 2007, in response to intense investor interest in the topic, according to the Securities and Exchange Commission (SEC).
Sub-prime mortgages, which were blamed for the financial crisis, are those instruments where risk of default is high.
In a statement on Thursday, the market regulator said that Citi has agreed to pay a $75-million penalty to settle the charges.
Vikram Pandit-led Citi was one of the worst hit by the financial meltdown, forcing the US government to provide bailout of billions of dollars. Pandit took over as Citi chief in late 2007.
"Citigroup repeatedly made misleading statements about the extent of its holdings of assets backed by sub-prime mortgages in earnings calls and public filings," SEC said in the complaint.
According to the market regulator, throughout the period in question, Citi represented that sub-prime exposure in its investment banking unit -- Citi Markets & Banking -- was $13 billion or less. However, at that time, the division's sub-prime exposure was over $50 billion, it noted.
"The misleading disclosures were made at a time of heightened investor and analyst interest in public company exposure to sub-prime mortgages," SEC pointed out.
Earlier this month, Goldman Sachs agreed to shell out a record fine of $550 million to settle SEC allegations related to misrepresentation of facts about a financial product tied to sub-prime mortgages.
In February, Bank of America had announced it would pay $150 million for settling charges that the firm failed to inform shareholders about bonuses kept for Merill staff. BofA had snapped up Merrill Lynch for over $30 billion.