Citigroup Inc. can be granted a $1.2 billion claim against Lehman Brothers Holdings Inc.’s defunct brokerage and will pay an affiliate of the Lehman parent $167 million to settle a dispute over amounts owed on foreign- exchange transactions, a judge ruled.

The disputes arose from Citigroup’s role in clearing and settling foreign exchange transactions for Lehman and its affiliates before and during the week of Lehman’s September 2008 bankruptcy.

Larger sums than those settled remain in dispute, the parties said in the document, published in an order signed Tuesday in federal court in Manhattan.

Overseen by a new board since its emergence from bankruptcy in March 2012, Lehman is resolving disputes and cutting claims to continue paying approved creditors. The brokerage, being separately liquidated, is planning its first payment to its former clients.

The dispute with Citigroup is Lehman Brothers Holdings Inc. v. Citibank N.A, 12-0l044, U.S. Bankruptcy Court, Southern District of New York (Manhattan).