Judge Questions Fairness Of Citigroup's Tits - Reuters/HufPo [View all]

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Judge Questions Fairness Of Citigroup's $590 Million Settlement
Reuters | HuffPo
Posted: 04/01/2013 7:44 pm EDT

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(Reuters) - A Manhattan federal judge on Monday signaled he will not rubber-stamp Citigroup Inc's proposed $590 million settlement of a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets.

U.S. District Judge Sidney Stein asked lawyers for the bank and its shareholders to address several issues at an April 8 fairness hearing, including requested legal fees and expenses of roughly $100 million, and the absence of payments by former Citigroup executives.

Citigroup spokesman Mark Costiglio declined to comment. Peter Linden, a partner at the law firm Kirby McInerney who represents the shareholders, did not immediately respond to requests for comment.

Stein joined other judges in recent years to question the fairness of large legal settlements in the financial industry.

Citigroup awaits a decision from the federal appeals court in New York on whether Stein's colleague Jed Rakoff properly rejected a $285 million settlement with the U.S. Securities and Exchange Commission over the alleged defrauding of investors.

On Thursday, U.S. District Judge Victor Marrero in Manhattan cited that case in delaying a decision to approve the SEC's $602 million insider trading settlement with a unit of Steven Cohen's hedge fund SAC Capital Advisors LP.

The $590 million settlement resolved claims by Citigroup shareholders from February 26, 2007 to April 18, 2008 that the bank failed in those years to properly write down risky debt, often backed by subprime mortgages, and concealed the risks.

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More: http://www.huffingtonpost.com/2013/04/01/citigroup-settlement-judge_n_2995229.html