According to the financial industry regulator, the investment bank stated, via public filings and earnings calls made in 2007, that its exposure to the market was lower than $13 billion.
However, the real figure was more than $50 billion as the bank did not include two different categories of subprime-backed assets, the SEC stated.
An executive currently working for Citigroup and another who has left the firm were charged of being responsible for the inaccurate statements.
Robert Khuzami, director of the SEC's Division of Enforcement, said that Citigroup âboasted of superior risk management skillsâ in being able to reduce its exposure to a mortgage market which was in steep decline.
"The rules of financial disclosure are simple - if you choose to speak, speak in full and not in half-truths," he stated.
While Citi received a $75 million penalty, Gary Crittenden, former chief financial officer at the bank and Arthur Tildesley Jr, the current head of cross marketing, also agreed to pay fines.
The formerâs penalty was $100,000 while the latter agreed to pay $80,000.
Citigroup neither admitted nor denied the allegations made by the SEC.
By Jim Ottewill