Posted 3 years ago on Oct. 22, 2011, 7:10 p.m. EST by AmericanRedWhiteBlue
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Citigroup Inc. on Wednesday agreed to pay a $285 million fine to settle civil charges brought by the Securities and Exchange Commission that it sold securities backed by mortgages that it simultaneously bet against.
The regulator alleges that Citigroup Global Markets structured and marketed a $500 million collateralized debt obligation that was backed by subprime loans, and then bet against those mortgage-related assets, which it didn’t disclose to investors.
According to the agency, one trader in an email called the portfolio “dogshit” and “possibly the best short ever.”
The CDO in question defaulted within months, leaving investors with losses, while Citigroup made $160 million in fees and trading profits, according to the SEC.