NEW YORK ( TheStreet) -- Citigroup ( C) has agreed to pay a regulatory penalty of $75 million to settle allegations that it led misled investors about its exposure to subprime mortgages in 2007. The Securities and Exchange Commission announced the settlement, noting that the bank neither admitted or denied the allegations while agreeing to the settlement. Two company executives -- Former CFO Gary Crittenden and Arthur Tildesley, Jr., who served as head of investor relations at the time and is now the head of cross marketing at the company -- have agreed to pay fines to settle charges as well. Crittenden will pay $100,000, and Tildesley Jr. will pay $80,000. Specifically, the SEC alleged that: "Between July and mid-October 2007, Citigroup represented that subprime exposure in its investment banking unit was $13 billion or less, when in fact it was more than $50 billion." "We are pleased that we have reached agreement with the SEC to put this matter concerning certain 2007 disclosures behind us, and that the SEC is not charging Citi or any individual with intentional or reckless misconduct," Citigroup said in a statement e-mailed to TheStreet. In its statement, Citigroup added it continues to focus on contributing to the economic recovery and generating sustained profitability. "Under CEO Vikram Pandit's leadership, we have bolstered our financial strength, overhauled our risk management, reduced our risk exposures, and made Citi a more focused enterprise by returning to banking as the core of our business," the statement reads. Earlier on Thursday, the headlines on Citigroup had a more positive bent as the bank's plans to revive its U.S. consumer banking business by following what it already does -- successfully -- in other regions across the world came to light. Manuel Medina-Mora, Citigroup's head of its consumer banking for the Americas, in an internal memo to employees on Wednesday, offered slightly more detail to the bank's previously stated intention to focus its U.S. consumer business on targeting a few key cities and the wealthy individuals who live there. In the memo, Medina-Mora said there is "significant opportunity" to grow the North American consumer banking business, but it requires Citigroup to focus on serving customers with "excellence," focusing primarily on areas of strength and using innovation and improving capabilities to lay the "foundation for growth." "First, as a team, we will put the customer at the center of everything that we do. We will listen to our customers and build long-term, meaningful relationships with them beyond just developing products," the memo reads. The goal is for Citigroup to replicate in North America the best practices it deploys in consumer businesses in other regions. Thus includes emphasizing banking products and services in cities where the bank has a strong presence, the memo says. Medina-Mora was promoted to CEO of Citigroup's Consumer Banking for the Americas in January after the departure of Terri Dial. Part of the plan is to begin offering Citigold -- the bank's flagship banking product for wealthy customers in its international market -- in the United State as well, according to the Financial Times. The bank also expects to create a new "Citi Forward" value proposition and strengthen its small business and commercial banking businesses. In addition, Citigroup is investing in sales force and marketing efforts, distribution infrastructure and risk management capabilities as well as overhauling its credit card offerings, the memo said. Citigroup -- which needed $45 billion in bailout funds from the government to keep it alive during the worst of the financial crisis -- is undergoing a downsizing of titanic proportions, as it looks to slim its balance sheet and shake loose its excessive business lines and focus on a few key businesses globally.
The bank has needed roughly two years to clean up the mess left by the financial crisis, but the message growing in intensity this year from the diversified institution is about having a clear strategy for the future. Citigroup has already seen the benefits of its international expansion efforts, but this memo makes clear that it hasn't forgotten about the U.S. consumer. Instead of competing directly against large money-center rivals JPMorgan Chase ( JPM), Bank of America ( BAC) and Wells Fargo ( WFC) that tend to target mass-affluent customers nearly everywhere in the country, Citigroup is concentrating on wealthier individuals in a few key U.S. cities. The fact that Citigroup finally has a "plan" for its struggling U.S. consumer business should be a relief to investors. CEO Vikram Pandit has previously said that the U.S. consumer is one area where the bank would like to reinvest proceeds from the sale of its toxic assets, but exact details on how the bank would accomplish that were still vague until recently. Wall Street sentiment on Citigroup overall is fairly positive these days, even as the U.S. Treasury continues its sale of Citigroup's common shares -- now down to roughly one-fifth of the bank -- and as credit quality improves and the sale or repositioning of unwanted assets continues. Of the 21 analysts covering the bank, 11 rate it at either buy or strong buy, and the median 12-month price target on the stock is $5.50, a premium of more than 30% to current prices. It's been a volatile 2010 for Citigroup shares. The stock was recently changing hands at $4.11, up 2 cents, for the session. Year-to-date, it's up almost 25%, but it's also pulled back that far from the 52-week high it set last August. --Written by Laurie Kulikowski in New York.