Citibank 2013 Annual Report Download - page 329

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ET AL. v. VISA INC., ET AL., name Citigroup as a defendant. Additional
information concerning these actions is publicly available in court filings
under docket numbers 1:13-CV-04442 (S.D.N.Y.) (Hellerstein, J.) and
13-10-75377A (Tex. D. Ct).
Regulatory Review of Consumer “Add-On” Products
Certain of Citi’s consumer businesses, including its Citi-branded and retail
services cards businesses, offer or have in the past offered or participated
in the marketing, distribution, or servicing of products, such as payment
protection and identity monitoring, that are ancillary to the provision of
credit to the consumer (add-on products). These add-on products have been
the subject of enforcement actions against other institutions by regulators,
including the Consumer Financial Protection Bureau (CFPB), the OCC,
and the FDIC, that have resulted in orders to pay restitution to customers
and penalties in substantial amounts. Citi has made restitution to certain
customers in connection with certain add-on products and anticipates
making additional restitution. Certain state attorneys general also have
filed industry-wide suits under state consumer protection statutes, alleging
deceptive marketing practices in connection with the sale of payment
protection products and demanding restitution and statutory damages
for in-state customers. In light of the current regulatory focus on add-on
products and the actions regulators have taken in relation to other credit card
issuers, one or more regulators may order that Citi pay additional restitution
to customers and/or impose penalties or other relief arising from Citi’s
marketing, distribution, or servicing of add-on products.
Parmalat Litigation and Related Matters
On July 29, 2004, Dr. Enrico Bondi, the Extraordinary Commissioner
appointed under Italian law to oversee the administration of various
Parmalat companies, filed a complaint in New Jersey state court against
Citigroup and Related Parties alleging, among other things, that the
defendants “facilitated” a number of frauds by Parmalat insiders. On
October 20, 2008, following trial, a jury rendered a verdict in Citigroup’s
favor on Parmalat’s claims and in favor of Citibank, N.A. on three
counterclaims. Parmalat has exhausted all appeals, and the judgment is now
final. Additional information concerning this matter is publicly available in
court filings under docket number A-2654-08T2 (N.J. Sup. Ct.).
Prosecutors in Parma and Milan, Italy, have commenced criminal
proceedings against certain current and former Citigroup employees (along
with numerous other investment banks and certain of their current and
former employees, as well as former Parmalat officers and accountants).
In the event of an adverse judgment against the individuals in question,
the authorities could seek administrative remedies against Citigroup.
On April 18, 2011, the Milan criminal court acquitted the sole Citigroup
defendant of market-rigging charges. The Milan prosecutors have appealed
part of that judgment and seek administrative remedies against Citigroup,
which may include disgorgement of 70 million Euro and a fine of 900,000
Euro. On April 4, 2013, the Italian Supreme Court granted the appeal of
the Milan Public Prosecutors and referred the matter to the Milan Court
of Appeal for further proceedings concerning the administrative liability, if
any, of Citigroup. Additionally, the Parmalat administrator filed a purported
civil complaint against Citigroup in the context of the Parma criminal
proceedings, which seeks 14 billion Euro in damages. The trial in the Parma
criminal proceedings is ongoing. Judgment is expected towards the end of
2014. In January 2011, certain Parmalat institutional investors filed a civil
complaint seeking damages of approximately 130 million Euro against
Citigroup and other financial institutions.
Allied Irish Bank Litigation
In 2003, Allied Irish Bank (AIB) filed a complaint in the United States District
Court for the Southern District of New York seeking to hold Citibank, N.A.
and Bank of America, N.A., 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, N.A. and Bank of America, N.A. collectively.
In 2006, the court granted in part and denied in part defendants’ motion
to dismiss. In 2009, AIB filed an amended complaint. In 2012, the parties
completed discovery and the court granted Citibank, N.A.’s motion to strike
AIB’s demand for a jury trial. Citibank, N.A. also filed a motion for summary
judgment, which is pending. AIB has announced a settlement with Bank
of America, N.A. for an undisclosed amount, leaving Citibank, N.A. as the
sole remaining defendant. 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.