Citibank 2014 Annual Report Download - page 309

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On December 19, 2014, Citigroup, the 18 institutional investors, and the
trustees for these securitizations executed a revised settlement agreement
resolving a substantial majority of the claims contemplated by the
April 7, 2014 offer of settlement. On December 31, 2014, the trustees amended
the settlement agreement to accept the offer as to certain additional claims.
As of December 31, 2014, the trustees have accepted the settlement for 64
trusts in whole, and the trustees have accepted in part and excluded in part
four trusts from the settlement. Pursuant to the terms of the settlement
agreement, the trustees’ acceptance is subject to a judicial approval
proceeding, which was initiated by the trustees on December 21, 2014.
Additional information concerning this action is publicly available in court
filings under the docket number 653902/2014 (N.Y. Sup. Ct.) (Friedman, J.).
To date, trustees have filed six actions against Citigroup seeking to
enforce certain of these contractual repurchase claims in connection with
four private-label securitizations. Each of the six actions is in the early
stages of proceedings. In the aggregate, plaintiffs are asserting repurchase
claims as to approximately 6,700 loans that were securitized into these
four securitizations, as well as any other loans that are later found to have
breached representations and warranties. Additional information concerning
these actions is publicly available in court filings under the docket numbers
13 Civ. 2843 (S.D.N.Y.) (Daniels, J.), 13 Civ. 6989 (S.D.N.Y.) (Daniels, J.),
653816/2013 (N.Y. Sup. Ct.) (Kornreich, J.), and 653930/2014 (N.Y. Sup. Ct.).
Mortgage-Backed Securities Trustee Actions. On June 18, 2014, a group
of investors in 48 MBS trusts for which Citibank, N.A. served or currently
serves as trustee filed a complaint in New York State Supreme Court in
BLACKROCK ALLOCATION TARGET SHARES: SERIES S. PORTFOLIO, ET
AL. v. CITIBANK, N.A. The complaint, like those filed against other MBS
trustees, alleges that Citibank, N.A. failed to pursue contractual remedies
against loan originators, securitization sponsors and servicers. This action
was withdrawn without prejudice, effective December 17, 2014. Additional
information concerning this action is publicly available in court filings
under the docket number 651868/2014 (N.Y. Sup. Ct.) (Ramos, J.). On
November 24, 2014, largely the same group of investors filed an action in the
United States District Court for the Southern District of New York, captioned
FIXED INCOME SHARES: SERIES M ET AL. V. CITIBANK, N.A., alleging
similar claims relating to 27 MBS trusts sponsored by UBS, Lehman Brothers,
American Home Mortgage, Goldman Sachs, Country Place, PHH Mortgage,
Wachovia and Washington Mutual. Additional information concerning
this action is publicly available in court filings under the docket number
14-cv-9373 (S.D.N.Y.) (Furman, J.).
On June 27, 2014, a separate group of MBS investors filed a summons
with notice in FEDERAL HOME LOAN BANK OF TOPEKA, ET AL. v. CITIBANK,
N.A. The summons alleges that Citibank, N.A., as trustee for an unspecified
number of MBS, failed to pursue remedies on behalf of the trusts. This
action was withdrawn without prejudice on November 10, 2014. Additional
information concerning this action is publicly available in court filings
under the docket number 651973/2014 (N.Y. Sup. Ct.).
Counterparty and Investor Actions
In 2010, Abu Dhabi Investment Authority (ADIA) commenced an arbitration
(ADIA I) against Citigroup and Related Parties before the International
Center for Dispute Resolution (ICDR), alleging statutory and common
law claims in connection with its $7.5 billion investment in Citigroup in
December 2007. ADIA sought rescission of the investment agreement or, in
the alternative, more than $4 billion in damages. Following a hearing in
May 2011 and post-hearing proceedings, on October 14, 2011, the arbitration
panel issued a final award and statement of reasons finding in favor of
Citigroup on all claims asserted by ADIA. On March 4, 2013, the United
States District Court for the Southern District of New York denied ADIA’s
petition to vacate the arbitration award and granted Citigroup’s cross-petition
to confirm. ADIA appealed and, on February 19, 2014, the United States
Court of Appeals for the Second Circuit affirmed the judgment. ADIA filed a
petition for review in the United States Supreme Court, which was denied on
October 6, 2014. Additional information concerning this action is publicly
available in court filings under the docket numbers 12 Civ. 283 (S.D.N.Y.)
(Daniels, J.),13-1068-cv (2d Cir.), and 13-1500 (U.S.).
On August 20, 2013, ADIA commenced a second arbitration (ADIA II)
against Citigroup before the ICDR, alleging common law claims arising out
of the same investment at issue in ADIA I. On August 28, 2013, Citigroup
filed a complaint against ADIA in the United States District Court for the
Southern District of New York seeking to enjoin ADIA II on the ground that it
is barred by the court’s judgment confirming the arbitral award in ADIA I. On
September 23, 2013, ADIA filed motions to dismiss Citigroup’s complaint and
to compel arbitration. On November 25, 2013, the court denied Citigroup’s
motion for a preliminary injunction and granted ADIA’s motions to dismiss
and to compel arbitration. On December 23, 2013, Citigroup appealed
that ruling to the United States Court of Appeals for the Second Circuit. On
January 14, 2015, the Second Circuit affirmed the district court’s ruling.
Additional information concerning this action is publicly available in court
filings under the docket numbers 13 Civ. 6073 (S.D.N.Y.) (Castel, J.) and
13-4825 (2d Cir.).
Alternative Investment Fund-Related Litigation and
Other Matters
Since mid-2008, the SEC has been investigating the management and
marketing of the ASTA/MAT and Falcon funds, alternative investment
funds managed and marketed by certain Citigroup affiliates that suffered
substantial losses during the credit crisis. In addition to the SEC inquiry,
on June 11, 2012, the New York Attorney General served a subpoena on a
Citigroup affiliate seeking documents and information concerning certain
of these funds, and, on August 1, 2012, the Massachusetts Attorney General
served a Civil Investigative Demand on a Citigroup affiliate seeking similar
documents and information. Citigroup is cooperating fully with these
inquiries. Citigroup has entered into tolling agreements with the SEC
and the New York Attorney General concerning certain claims related to
the investigations.