Citibank 2013 Annual Report Download - page 327

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On December 16, 2011, the JFSA took administrative action against
Citigroup Global Markets Japan Inc. (CGMJ) for, among other things,
certain communications made by two CGMJ traders about the Euroyen
Tokyo interbank offered rate (TIBOR) and the Japanese yen London
interbank offered rate (LIBOR). The JFSA issued a business improvement
order and suspended CGMJ’s trading in derivatives related to yen LIBOR
and Euroyen and yen TIBOR from January 10 to January 23, 2012. On the
same day, the JFSA also took administrative action against Citibank Japan
Ltd. (CJL) for conduct arising out of CJL’s retail business and also noted that
the communications made by the CGMJ traders to employees of CJL about
Euroyen TIBOR had not been properly reported to CJL’s management team.
On December 4, 2013, the EC announced a settlement with Citigroup and
CGMJ resolving the EC’s investigation into yen LIBOR and Euroyen TIBOR. As
detailed in the EC’s announcement, Citigroup was among five banks and one
interdealer broker settling the EC’s investigation. As part of the settlement,
Citigroup has agreed to pay a fine of 70,020,000 Euro.
Antitrust and Other Litigation: Citigroup and Citibank, N.A., along
with other U.S. Dollar (USD) LIBOR panel banks, are defendants in a
multi-district litigation (MDL) proceeding before Judge Buchwald in the
United States District Court for the Southern District of New York captioned
IN RE LIBOR-BASED FINANCIAL INSTRUMENTS ANTITRUST LITIGATION
(the LIBOR MDL), appearing under docket number 1:11-md-2262 (S.D.N.Y.).
Judge Buchwald appointed interim lead class counsel for, and consolidated
amended complaints were filed on behalf of, three separate putative classes
of plaintiffs: (i) over-the-counter (OTC) purchasers of derivative instruments
tied to USD LIBOR; (ii) purchasers of exchange-traded derivative instruments
tied to USD LIBOR; and (iii) indirect OTC purchasers of U.S. debt securities.
Each of these putative classes alleged that the panel bank defendants
conspired to suppress USD LIBOR in violation of the Sherman Act and/or
the Commodity Exchange Act, thereby causing plaintiffs to suffer losses on
the instruments they purchased. Also consolidated into the MDL proceeding
were individual civil actions commenced by various Charles Schwab entities
alleging that the panel bank defendants conspired to suppress the USD
LIBOR rates in violation of the Sherman Act, the Racketeer Influenced and
Corrupt Organizations Act (RICO), and California state law, causing the
Schwab entities to suffer losses on USD LIBOR-linked financial instruments
they owned. Plaintiffs in these actions sought compensatory damages
and restitution for losses caused by the alleged violations, as well as treble
damages under the Sherman Act. The Schwab and OTC plaintiffs also sought
injunctive relief.
Citigroup and Citibank, N.A., along with other defendants, moved to
dismiss all of the above actions. On March 29, 2013, Judge Buchwald issued
an opinion and order dismissing the plaintiffs’ federal and state antitrust
claims, RICO claims and unjust enrichment claims in their entirety,
but allowing certain of the plaintiffs’ Commodity Exchange Act claims
to proceed.
On August 23, 2013, Judge Buchwald issued a decision resolving several
motions filed after the March 29, 2013 order. Pursuant to the August 23, 2013
decision, on September 10, 2013, consolidated second amended complaints
were filed by interim lead plaintiffs for the putative classes of (i) OTC
purchasers of derivative instruments tied to USD LIBOR and (ii) purchasers
of exchange-traded derivative instruments tied to USD LIBOR. Each of these
putative classes continues to allege that the panel bank defendants conspired
to suppress USD LIBOR: (i) OTC purchasers assert claims under the Sherman
Act and for unjust enrichment and breach of the implied covenant of good
faith and fair dealing and (ii) purchasers of exchange-traded derivative
instruments assert claims under the Commodity Exchange Act and the
Sherman Act and for unjust enrichment.
On September 17, 2013, the plaintiff class of indirect OTC purchasers of
U.S. debt securities filed an appeal in the Second Circuit of Judge Buchwald’s
March 29, 2013 and August 23, 2013 orders. The Schwab plaintiffs filed a
separate appeal in the Second Circuit on September 24, 2013. The Second
Circuit dismissed the appeals on October 30, 2013, and denied the plaintiffs’
motions to reconsider dismissal on December 16, 2013.
As part of the August 23, 2013 order, Judge Buchwald also continued
the stay of all actions that have been consolidated into the LIBOR MDL
proceeding after June 29, 2012. Citigroup and/or Citibank, N.A. are named
in 36 such stayed actions. The stayed actions include lawsuits filed by, or on
behalf of putative classes of, community and other banks, savings and loans
institutions, credit unions, municipalities and purchasers and holders of
LIBOR-linked financial products. As a general matter, plaintiffs allege that
defendant panel banks artificially suppressed USD LIBOR, thereby decreasing
the amount plaintiffs would have received in the absence of manipulation.
Plaintiffs seek compensatory damages, various forms of enhanced damages,
and declaratory and injunctive relief. Additional information relating to
these actions is publicly available in court filings under the following docket
numbers: 1:12-cv-4205 (S.D.N.Y.) (Buchwald, J.); 1:12-cv-5723 (S.D.N.Y.)
(Buchwald, J.); 1:12-cv-5822 (S.D.N.Y.) (Buchwald, J.); 1:12-cv-6056
(S.D.N.Y.) (Buchwald, J.); 1:12-cv-6693 (S.D.N.Y.) (Buchwald, J.); 1:12-cv-
7461 (S.D.N.Y.) (Buchwald, J.); 2:12-cv-6294 (E.D.N.Y.) (Seybert, J.); 2:12-
cv-10903 (C.D. Cal.) (Snyder, J.); 3:12-cv-6571 (N.D. Cal.) (Conti, J.); 3:13-
cv-106 (N.D. Cal.) (Beller, J.); 4:13-cv-108 (N.D. Cal.) (Ryu, J.); 3:13-cv-109
(N.D. Cal.) (Laporte, J.); 3:13-cv-48 (S.D. Cal.) (Sammartino, J.); 5:13-cv-62
(C.D. Cal.) (Phillips, J.); 1:13-cv-346 (S.D.N.Y.) (Buchwald, J.); 1:13-cv-407
(S.D.N.Y.) (Buchwald, J.); 5:13-cv-122 (C.D. Cal.) (Bernal, J.); 1:13-cv-1016
(S.D.N.Y.) (Buchwald, J.); 1:13-cv-1456 (S.D.N.Y.) (Buchwald, J.); 1:13-
cv-1700 (S.D.N.Y.) (Buchwald, J.); 1:13-cv-342 (E.D. Va.) (Brinkema, J.);
1:13-cv-2297 (S.D.N.Y.) (Buchwald, J.); 4:13-cv-2244 (N.D. Cal.) (Hamilton,
J.); 3:13-cv-2921 (N.D. Cal.) (Chesney, J.); 3:13-cv-1466 (S.D. Cal.) (Lorenz,
J.); 3:13-cv-2979 (N.D. Cal.) (Tigar, J.); 4:13-cv-2149 (S.D. Tex.) (Hoyt, J.);
2:13-cv-1476 (E.D. Cal.) (Mueller, J.); 1:13-cv-4018 (S.D.N.Y.) (Buchwald,
J.); 2:13-cv-4352 (E.D. Pa.) (Restrepo, J.); 4:13-cv-334 (S.D. Iowa) (Pratt. J.);
4:13-cv-335 (S.D. Iowa) (Pratt, J.); 1:13-cv-7720 (S.D.N.Y.) (Buchwald, J.);
1:13-cv-7720 (S.D.N.Y.) (Buchwald, J.); 1:13-cv-5278 (N.D. Cal.) (Vadas, J.);
and 1:14-cv-146 (S.D.N.Y.) (Buchwald, J.).