NEW YORK — Citigroup is paying nearly $300 million to settle a civil fraud complaint, in which the banking giant promoted an investment tied to the housing market, yet failed to tell investors it was betting those securities would fail.

The Securities and Exchange Commission alleges that Citigroup packed the $1 billion investment with assets that eventually buckled during the mortgage meltdown. Citigroup traders bet against the security, or shorted it, making money at the expense of its clients, the complaint says.

One trader wrote in an email obtained as part of the SEC investigation that the Citigroup investments were possibly "the best short EVER!" An investment manager at another company said in an email: "The portfolio is horrible" about the securities that wiped out investors when the investments defaulted in November 2007.

"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," said Robert Khuzami, director of the SEC's enforcement division.

The settlement is the latest in a number of regulatory actions against banks for their role during the housing-market collapse and ensuing financial crisis. The SEC has been investigating how Wall Street firms packaged risky mortgages into instruments such as collateralized debt obligations and other investments, which imploded when housing markets tumbled.

Goldman Sachs Group agreed to pay $550 million to settle claims that it failed to tell clients that the investment bank was betting against some of its mortgage-related securities. JPMorgan Chase & Co. agreed in June to pay $153.6 million on similar accusation. The SEC has said other major banks are still under scrutiny.

Compared with Goldman, the SEC said that Citigroup was more integrally involved in the wrongdoing alleged in its case. Citigroup employees designed the security, marketed it to investors and made $160 million betting against it. Goldman's securities, however, were designed by an outside hedge-fund investor who wanted to bet against it.