Citibank 2011 Annual Report Download - page 297

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Research Analyst Litigation
In March 2004, a putative research-related customer class action alleging
various state law claims arising out of the issuance of allegedly misleading
research analyst reports concerning numerous issuers was filed against
certain Citigroup affiliates in Illinois state court. On October 13, 2011, the
court entered an order dismissing with prejudice all class-action claims
asserted in the action on the ground that the Securities Litigation Uniform
Standards Act of 1998 precludes those claims. The court granted leave for
the putative representative plaintiff to file an amended complaint asserting
only his individual claims within 21 days. An amended complaint was not
filed within the 21-day period. The putative representative plaintiff has
filed a notice of appeal from the court’s October 13, 2011 order. Additional
information concerning this matter is publicly available in court filings
under docket numbers 04-L-265 (Ill. Cir.) (Hylla, J.) and 5-11-0504
(Ill. App. Ct. 5 Dist.).
Companhia Industrial de Instrumentos de Precisão
Litigation
A commercial customer, Companhia Industrial de Instrumentos de Precisão
(CIIP), filed a lawsuit against Citibank, N.A., Brazil branch (Citi Brazil), in
1992, alleging damages arising from an unsuccessful attempt by Citi Brazil
in 1975 to declare CIIP bankrupt after CIIP defaulted on a loan owed to
Citi Brazil. The trial court ruled in favor of CIIP and awarded damages that
Citigroup had estimated at more than $330 million after taking into account
interest, currency adjustments, and current exchange rates. Citi Brazil lost
its appeal but filed a special appeal to the Superior Tribunal of Justice (STJ),
the highest appellate court for federal law in Brazil. The 4th Section of the
STJ ruled 3-2 in favor of Citi in November 2008. CIIP appealed the decision
to the Special Court of the STJ on procedural grounds. In December 2009, the
Special Court of the STJ decided 9-0 in favor of CIIP on the procedural issue,
overturning the 3-2 merits decision in favor of Citi. Citi Brazil filed a motion
for clarification with the Special Court of the STJ, and on May 4, 2011, the
Special Court ruled 5-3 in favor of Citi Brazil. This ruling has the effect of
reinstating the 3-2 decision of the 4th Section of the STJ in favor of Citi Brazil
rendered in November 2008, which had reversed the adverse judgment of the
trial court. The only procedural recourse remaining to CIIP would be to file a
constitutional claim with the Supreme Court of Brazil.
Allied Irish Bank Litigation
In 2003, Allied Irish Bank (AIB) filed a complaint in the Southern District
of New York seeking to hold Citibank and Bank of America, former prime
brokers for AIB’s subsidiary Allfirst Bank (Allfirst), liable for losses incurred
by Allfirst as a result of fraudulent and fictitious foreign currency trades
entered into by one of Allfirst’s traders. AIB seeks compensatory damages of
approximately $500 million, plus punitive damages, from Citibank and Bank
of America collectively. In 2006, the Court granted in part and denied in part
defendants’ motion to dismiss. In 2009, AIB filed an amended complaint.
In 2011, the parties completed fact discovery. Additional information
concerning this matter is publicly available in court filings under docket
number 03 Civ. 3748 (S.D.N.Y.) (Batts, J.).
Settlement Payments
Payments required in settlement agreements described above have been
made or are covered by existing litigation accruals.
* * *
Additional matters asserting claims similar to those described above may be
filed in the future.