Citibank 2013 Annual Report Download - page 326

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Money Laundering Inquiries
Citigroup and Related Parties, including Citigroup’s affiliate Banamex USA,
have received grand jury subpoenas issued by the United States Attorney’s
Office for the District of Massachusetts, concerning, among other issues,
policies, procedures and activities related to compliance with Bank Secrecy
Act and anti-money laundering requirements under applicable federal laws
and banking regulations. Banamex USA also has received a subpoena from
the FDIC related to its Bank Secrecy Act and anti-money laundering program.
Citigroup is cooperating fully with these inquiries.
Credit Default Swaps Matters
In April 2011, the European Commission (EC) opened an investigation (Case
No COMP/39.745) into the CDS industry. The scope of the investigation
initially concerned the question of “whether 16 investment banks and
Markit, the leading provider of financial information in the CDS market,
have colluded and/or may hold and abuse a dominant position in order to
control the financial information on CDS.” On July 2, 2013, the EC issued
to Citigroup, CGMI, Citigroup Global Markets Ltd., Citicorp North America
Inc., and Citibank, N.A., as well as Markit, ISDA, and 12 other investment
bank dealer groups, a Statement of Objections alleging that Citigroup and
the other dealers colluded to prevent exchanges from entering the credit
derivatives business in breach of Article 101 of the Treaty on the Functioning
of the European Union. The Statement of Objections sets forth the EC’s
preliminary conclusions, does not prejudge the final outcome of the case,
and does not benefit from the review and consideration of Citigroup’s
arguments and defenses. Citigroup filed a Reply to the Statement of
Objections on January 23, 2014, and it will have the opportunity to make oral
submissions to the EC, likely during the course of 2014.
In July 2009 and September 2011, the Antitrust Division of the U.S.
Department of Justice served Civil Investigative Demands (CIDs) on Citigroup
concerning potential anticompetitive conduct in the CDS industry. Citigroup
has responded to the CIDs and is cooperating with the investigation.
In addition, putative class action complaints have been filed by
various entities against Citigroup, CGMI and Citibank, N.A., among other
defendants, alleging anticompetitive conduct in the CDS industry and
asserting various claims under Sections 1 and 2 of the Sherman Act as
well as a state law claim for unjust enrichment. On October 16, 2013,
the U.S. Judicial Panel on Multidistrict Litigation centralized numerous
putative class actions filed by various entities against Citigroup, CGMI and
Citibank, N.A., among other defendants, alleging anticompetitive conduct
in the credit default swaps industry and ordered that those actions pending
in the United States District Court for the Northern District of Illinois be
transferred to the United States District Court for the Southern District of
New York for coordinated or consolidated pretrial proceedings before Judge
Denise Cote. Additional information relating to these actions is publicly
available in court filings under the docket numbers 1:13-cv-03357 (N.D. Ill.),
1:13-cv-04979 (N.D. Ill.), 1:13-cv-04928 (S.D.N.Y.), 1:13-cv-05413 (N.D.
Ill.), and 1:13-cv-05417 (N.D. Ill.), 1:13-cv-05725 (N.D. Ill.), and 13-cv-6116
(S.D.N.Y.).
Foreign Exchange Matters
Government agencies in the U.S. and other jurisdictions are conducting
investigations or making inquiries regarding trading on the foreign
exchange markets. Citigroup has received requests for information and
is cooperating with the investigations and inquiries and responding to
the requests.
Numerous foreign exchange dealers, including Citibank, N.A., Citigroup,
and, in certain cases, Citigroup Forex, Inc., are named as defendants in
putative class actions that are proceeding on a consolidated basis before
Judge Schofield in the United States District Court for the Southern District
of New York under the caption IN RE FOREIGN EXCHANGE BENCHMARK
RATES ANTITRUST LITIGATION. The plaintiffs in these actions allege that
the defendants colluded to manipulate the WM/Reuters rate (WMR), thereby
causing the putative classes to suffer losses in connection with WMR-based
financial instruments. The plaintiffs assert federal and state antitrust claims
and claims for unjust enrichment, and seek compensatory damages, treble
damages where authorized by statute, restitution, and declaratory and
injunctive relief. Additional information concerning these consolidated
actions is publicly available in court filings under the docket number
1:13-cv-7789. Additionally, Citibank, N.A., Citigroup, and CKI, as well as
numerous other foreign exchange dealers, are named as defendants in a
putative class action captioned SIMMTECH CO. v. BARCLAYS BANK PLC, ET
AL., that is also proceeding before Judge Schofield in the United States District
Court for the Southern District of New York. The plaintiff seeks to represent
a putative class of persons who traded foreign currency with the defendants
in Korea, alleging that the class suffered losses as a result of the defendants’
alleged WMR manipulation. The plaintiff asserts federal and state antitrust
claims, and seeks compensatory damages, treble damages, and declaratory
and injunctive relief. Additional information concerning this action is
publicly available in court filings under the docket number 1:13-cv-7953.
Interbank Offered Rates-Related Litigation and
Other Matters
Regulatory Actions: Government agencies in the U.S., including the
Department of Justice, the Commodity Futures Trading Commission, the
SEC, and a consortium of state attorneys general, as well as agencies in
other jurisdictions, including the EC, the U.K. Financial Conduct Authority,
the Japanese Financial Services Agency (JFSA), the Swiss Competition
Commission and the Monetary Authority of Singapore, are conducting
investigations or making inquiries regarding submissions made by panel
banks to bodies that publish various interbank offered rates and other
benchmark rates. As members of a number of such panels, Citigroup
subsidiaries have received requests for information and documents. Citigroup
is cooperating with the investigations and inquiries and is responding to
the requests.