Citigroup to pay $180 million over collapsed hedge funds

Citigroup agreed to pay $180 million to settle charges by the U.S. Securities and Exchange Commission that the bank concealed problems at two of its now-defunct hedge funds, while taking in additional investments in the months before the financial crisis.

Announced yesterday, the settlement comes more than seven years after the two hedge funds collapsed. In their wake, investors lost billions of dollars, according to the New York Times.

The Citigroup hedge funds used large amounts of leverage to boost returns on municipal bonds and fixed income investments. The funds were sold to investors by Citigroup’s financial advisers, who worked for the firm's former Smith Barney wealth management unit. Clients were told the hedge funds were about as safe as traditional bond funds, the SEC alleged.

Read more from the New York Times.