2 Citigroup affiliates paying $179.5M to resolve SEC case over hedge fund investments

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Two Citigroup Inc. affiliates have agreed to pay $179.5 million to resolve federal regulators' charges of misleading investors in hedge funds that later collapsed.

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The Securities and Exchange Commission announced Monday the settlement with Citigroup Alternative Investments, a subsidiary of the bank, and Citigroup Global Markets, an affiliated company. The amount they are paying will be returned to investors in two hedge funds managed by the firms.

The two firms neither admitted nor denied wrongdoing but did agree to refrain from future violations of securities laws.

The SEC said the firms sold securities in two hedge funds from 2002 to 2007, raising nearly $3 billion from mostly wealthy investors or institutions. The agency says the fund managers falsely told prospective investors they were low-risk.