Citigroup is paying $285m (£180m) to settle civil fraud charges from the SEC.
Credit Suisse was also involved in the the transaction and has paid $2.5m to settle the case, also without admitting or denying the charges.
The SEC said that Citigroup built a collateralised debt obligation, or CDO, made up of about $1bn of home loans in 2007.
The CDO defaulted within months, leaving the approximately 15 investors facing losses while Citigroup made $160m in fees and trading profits.
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