Citigroup Inc. agreed to pay $75 million to settle a 3-year-old lawsuit brought by investors over the banking group's role in the collapse of Global Crossing Ltd. The settlement includes an undisclosed contribution from Jack Grubman, the former star telecom analyst for Citigroup's Salomon Smith Barney unit.

New York-based Citigroup was one of Global Crossing's investment banks. The class-action lawsuit accused the bank of pumping up research reports, failing to report conflicts of interest and eventually costing the plaintiffs millions of dollars in losses.

Global Crossing, run from Beverly Hills by financier Gary Winnick, crumpled under skyrocketing debt and excess fiber-optic cable capacity. It was accused of inflating its books after filing for bankruptcy in January 2002. (No charges were ever filed.) The bankruptcy erased $45 billion in shareholder value and at the time was the largest bankruptcy, according to

Wednesday's $75 million settlement includes payments from Citigroup Capital Markets (formerly Solomon Smith Barney) and Grubman, who resigned in August of 2002 amid a federal investigation into conflicts of interest.

Investigations by New York Attorney General Eliot Spitzer revealed that Grubman sat in on board meetings of telecom companies he covered and at times gave merger advice to those boards, nullifying himself as an "impartial" analyst. Amid shareholder lawsuits, congressional testimony and a lot of bad press, Grubman resigned, reportedly accepting a $30 million severance package.

Lead plaintiffs in the class-action case were the Public Employees Retirement System of Ohio and the State Teachers' Retirement Systems of Ohio. Both pension funds claim to have lost more than $110 million as a result of their investments in Global Crossing, which they claim was based on Citigroup investment advice and research. Citigroup denied violations of law but said it settled the case to effectively end the litigation.

The $75 million comes in addition to a $325 million settlement from Global Crossing executives announced last March. Winnick agreed to contribute $30 million to that settlement, which the company's law firm, Simpson Thacher & Bartlett, agreed to pay $19.5 million, and the insurance company for Global Crossings' officers and directors, Pender Insurance Co., agreed to pay the rest.

Wednesday's settlement represents the first of the investment banks to settle the investor lawsuits. Other defendants in the same suit include CIBC World Markets, a unit of the Canadian Imperial Bank of Commerce, J.P. Morgan Chase & Co., and the former accounting firm Arthur Andersen LLP. According to the plaintiff's law firm, Grant & Eisenhofer, none of the other defendants is close to settling.

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