Citigroup Inc has agreed to pay $158.3 million to settle U.S. civil claims that it defrauded the government into insuring thousands of risky home loans made by its CitiMortgage unit. Wednesday’s settlement resolves claims under the federal False Claims Act against the third-largest U.S. bank, and arose from a “whistleblower” lawsuit brought by Sherry Hunt, a CitiMortgage employee in Missouri.
CitiMortgage “admits, acknowledges and accepts responsibility” for misleading the government into insuring risky home loans, according to settlement papers filed in U.S. District Court in New York. Investigators said the misconduct lasted for more than six years.
The civil fraud case is part of a crackdown by the Department of Justice against lenders it believes contributed to the housing crisis by originating risky home loans that should not have been made, insured or sold. Whistleblowers can receive up to 25 percent of settlements reached with the government in such cases, depending on how much work they contributed.
The Financial Industry Regulatory Authority (FINRA) is a non-governmental organization that oversees brokerage firms and exchange markets in the United States. Established in 2007, FINRA is responsible for enforcing rules and regulations that govern registered brokers and broker-dealer firms. Its mission is to protect investors and ensure the integrity of the financial markets.
FINRA oversees the conduct of nearly 3,500 brokerage firms and approximately 617,000 registered representatives, ensuring they adhere to federal securities laws and FINRA’s rules. The organization conducts regular examinations, enforces disciplinary actions, and provides education and resources to both investors and industry professionals.
FINRA also plays a critical role in resolving disputes between investors and brokers through its arbitration and mediation services. By maintaining fair and transparent markets, FINRA contributes to the overall health and confidence in the financial system, providing a vital service to investors and the public.