Citibank 2014 Annual Report Download - page 311

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connection with its role as advisor to Tribune. A motion to dismiss the claim
against the Shareholder Defendants in the FITZSIMONS action is pending.
The noteholders’ claims were previously dismissed, and an appeal to the
Second Circuit is pending. A motion to dismiss the action against CGMI in
its role as advisor to Tribune is pending. Additional information concerning
these actions is publicly available in court filings under the docket numbers
08-13141 (Bankr. D. Del.) (Carey, J.), 11 MD 02296 (S.D.N.Y.) (Sullivan, J.),
12 MC 2296 (S.D.N.Y.) (Sullivan, J.), and 13-3992 (2d Cir.).
Credit Default Swaps Matters
In April 2011, the European Commission (EC) opened an investigation
(Case No COMP/39.745) into the credit default swap (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 made oral submissions to the EC
on May 14, 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 these putative class actions 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.
On September 4, 2014, the United States District Court for the Southern
District of New York granted in part and denied in part defendants’ motion to
dismiss the second consolidated amended complaint, dismissing plaintiffs’
claim for violation of Section 2 of the Sherman Act and certain claims for
damages, but permitting the case to proceed as to plaintiffs’ claims for
violation of Section 1 of the Sherman Act and unjust enrichment. Additional
information relating to this action is publicly available in court filings under
the docket number 13 MD 2476 (S.D.N.Y.) (Cote, J.).
Foreign Exchange Matters
Regulatory Actions: Government and regulatory agencies in the U.S.,
including the Antitrust Division and the Criminal Division of the Department
of Justice, as well as agencies in other jurisdictions, including the U.K.
Serious Fraud Office, the Swiss Competition Commission, and the Australian
Competition and Consumer Commission, are conducting investigations or
making inquiries regarding Citigroup’s foreign exchange business. Citigroup
is fully cooperating with these and related investigations and inquiries.
On November 12, 2014, the Commodity Futures Trading Commission
(CFTC), the U.K. Financial Conduct Authority (FCA), and the Office of
the U.S. Comptroller of the Currency (OCC) announced settlements with
Citibank, N.A. resolving their foreign exchange investigations. Citibank, N.A.
was among five banks settling the CFTC’s and the FCA’s investigations and
among three banks settling the OCC’s investigation. As part of the settlements,
Citibank, N.A. agreed to pay penalties of approximately $358 million to the
FCA, $350 million to the OCC, and $310 million to the CFTC and to enhance
further the control framework governing its foreign exchange business.
Antitrust and Other Litigation: Numerous foreign exchange dealers,
including Citigroup and Citibank, N.A., are named as defendants in putative
class actions that are proceeding on a consolidated basis 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. On
March 31, 2014, plaintiffs in the putative class actions filed a consolidated
amended complaint.
Citibank, N.A., Citigroup, and Citibank Korea Inc., as well as numerous
other foreign exchange dealers, were named as defendants in a putative
class action captioned SIMMTECH CO. v. BARCLAYS BANK PLC, ET AL.
(SIMMTECH) that was proceeding before the same court. The plaintiff
sought 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 asserted
federal and state antitrust claims, and sought compensatory damages, treble
damages, and declaratory and injunctive relief.
Additionally, Citibank, N.A. and Citigroup, as well as numerous other
foreign exchange dealers, were named as defendants in a putative class
action captioned LARSEN v. BARCLAYS BANK PLC, ET AL. (LARSEN), that
was proceeding before the same court. Plaintiff sought to represent a putative
class of persons or entities in Norway who traded foreign currency with
defendants, alleging that the class suffered losses as a result of defendants’
alleged WMR manipulation. Plaintiff asserted federal antitrust and unjust
enrichment claims, and sought compensatory damages, treble damages
where authorized by statute, and declaratory and injunctive relief.