Federal and state securities regulators today announced a preliminary settlement with Citigroup Global Markets over their sale to investors of auction-rate securities that became illiquid when that market collapsed.

The Securities and Exchange Commission's (SEC) Division of Enforcement announced Citi would give individual investors, small businesses, and charities all $7.5 billion of their money back from ARS they purchased from the firm. The agreement also would require Citi to use its best efforts to liquidate by the end of 2009 all of the approximately $12 billion worth of ARS the firm sold to retirement plans and other institutional investors.

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