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Washington. As the housing market began its collapse, Wall Street firms and sophisticated investors searched for ways to profit. Some of them found an easy method: Stuff a portfolio with risky mortgage-related investments, sell it to unsuspecting customers and bet against it.

Citigroup on Wednesday agreed to pay $285 million to settle a civil complaint by the Securities and Exchange Commission that it had defrauded investors who bought just such a deal.

The transaction involved a $1 billion portfolio of mortgage-related investments, many of which were handpicked for the portfolio by Citigroup without telling investors of its role or that it had made bets that the investments would fall in value.

In the four years since the housing market began its steady descent, securities regulators have settled only two cases related to the financial crisis for a larger sum of money.

This is also the third case brought by the SEC accusing a major Wall Street institution of misleading customers about who was putting together a security and about their motive.

Goldman Sachs and JPMorgan Chase & Co. both settled similar cases last year.

The settlement will refund investors with interest and include a $95 million fine — a relative pittance for a giant like Citigroup.

On Monday, the company reported that in the third quarter alone it earned profits of $3.8 billion on revenue of $20.8 billion.

The settlement may also have trouble getting approval from Jed S. Rakoff, the federal district judge in New York who must ultimately sign off on the fine and who has taken a hard line on SEC settlements.

Neither the SEC nor the Justice Department would say whether the case raised questions about whether Citigroup had been involved in any criminal wrongdoing.

But the case highlights a growing frustration felt by foreclosed homeowners, investors and Wall Street protesters alike that few, if any, senior banking executives have faced criminal charges for losses growing out of the financial crisis.

“The securities laws demand that investors receive more care and candor than Citigroup provided” to investors in the security, said Robert Khuzami, director of the SEC’s division of enforcement, referring to Wednesday’s action.

“Investors were not informed that Citigroup had decided to bet against them and had helped choose the assets that would determine who won or lost.”

The SEC also brought a case against Credit Suisse, which played a smaller role in the transaction, and against one individual at each company. But those individuals were midlevel employees; no senior executives at either company were charged.

Credit Suisse agreed to pay $2.5 million, half of it in penalties, to settle the case. The company declined to comment.

One of those employees, Brian Stoker, 40, who left Citigroup in 2008, will fight the SEC’s case.

The New York Times