Citigroup Inc. (NYSE: C) has just used the children’s game excuse of “Do Over!” for the third-quarter earnings. Citi announced after the close that it is lowering its previously reported third-quarter 2014 financial results. What seems to be happening is a rapidly developing regulatory situation, and this would be deemed material information ahead of its formal 10-Q filing.

This effort is not just lowered preliminary earnings. It lowered book value and capital ratios.

Citigroup said the lower earnings are due to a $600 million increase in legal accruals. Citi said, “The increase resulted from rapidly-evolving regulatory inquiries and investigations, including very recent communications with certain regulatory agencies related to previously-disclosed matters.”

The financial impact lowers Citi’s third-quarter 2014 net income from $3.4 billion to $2.8 billion. As this was disclosed in the 10-Q filing, it now takes earnings per share down to $0.88 from $1.07, and it lowers the firm’s Tier 1 Capital Ratio to 10.66% from 10.74%. Also, the firm’s book value was lowered to $67.11 from $67.31 per share.

This is one of those situations that we are calling a restatement, although technically it might be considered a formal restatement only if the company had already filed its 10-Q and then had to go back and adjust that filing.

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Citigroup shares closed up almost 1% at $53.15, against a 52-week range of $45.18 to $55.28, and shares were down 2% at $52.05 in the after-hours reaction. Stay tuned.

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