The Securities and Exchange Commission agreed to settle a civil complaint against Citigroup for $285 million dollars.  The complaint arose from the SEC’s investigation into charges that Citigroup had defrauded investors.  It was charged that Citigroup constructed a one billion dollar portfolio of mortgage-related investments, including high-risk investments that Citigroup officials specifically placed into the portfolio.  The investigation alleged that Citigroup did not inform investors of its role in selecting particular mortgages.  But it was also alleged that Citigroup failed to inform the investors that it had hedged its own position by betting that the investment would fail.

According to a report in the New York Times, the proposed settlement would refund money to investors with interest and would also include a fine of $95 million dollars.  In the third quarter of 2011 alone, however, Citigroup reported that it earned profits of $3.8 billion on revenue of $20.8 billion.  The fine, therefore, would amount to approximately 2.5% of the earnings from one quarter of one year.

The amalgamation of investments was known as Class V Funding III.  Citigroup’s brokerage subsidiary earned $126 million dollars in profits and received an additional $34 million dollars in fees for putting the arrangement together according to the report in the New York Times.

No criminal charges were filed against Citigroup or any of its executives.