Citi (C), SEC Are In Discussions To Settle Asset Disclosure Probe

The Journal reported that Citigroup Inc. (NYSE: C) is in the early stages of negotiating with the SEC to settle a probe into whether it misled investors by not making disclosures about the amount of troubled mortgage assets it held as the market started to tumble in 2007.

The Journal said the talks may signal that the SEC could be looking to resolve a number of civil probes that began in late 2007, when mortgage-related losses began rising on the books of several Wall Street banks. A Citigroup spokesman said the firm's policy isn't to comment on such regulatory issues.

Among issues being debated inside the SEC is whether, as a recipient of government-rescue funds, Citigroup should pay a large penalty in the case. If Citigroup is forced to pay a large penalty it would be in effect using taxpayer money to pay the penalties,. Citigroup received $45 billion from the government's Troubled Asset Relief Program and plans to raise an additional $5.5 billion in capital from private investors.

Additionally, the SEC also is considering bringing cases against individuals related to disclosure of mortgage assets, including top executives, according to the Journal.

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The SEC has opened similar inquiries into valuation and disclosure issues at Merrill Lynch & Co. and Lehman, among others.

You can see the full article here.

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