Citibank 2014 Annual Report Download - page 313

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Separately, on April 30, 2012, an action was filed in the United States
District Court for the Southern District of New York captioned LAYDON
v. MIZUHO BANK LTD. ET AL. against defendant banks that are or were
members of the panels making submissions used in the calculation of
Japanese yen LIBOR and TIBOR, and certain affiliates of those banks,
including Citigroup, Citibank, N.A., Citibank Japan Ltd. and Citigroup Global
Markets Japan Inc. The plaintiff asserts claims under federal antitrust law
and the Commodity Exchange Act, as well as a claim for unjust enrichment,
and seeks unspecified compensatory and punitive damages, including treble
damages under certain statutes, as well as costs and expenses. Additional
information concerning this action is publicly available in court filings
under the docket number 12 Civ. 3419 (S.D.N.Y.) (Daniels, J.).
On May 2, 2014, plaintiffs in the class action SULLIVAN v. BARCLAYS PLC,
ET AL pending in the United States District Court for the Southern District of
New York filed a second amended complaint naming Citigroup and Citibank,
N.A. as defendants. Plaintiffs claim to have suffered losses as a result of
purported EURIBOR manipulation and assert claims under the Commodity
Exchange Act, the Sherman Act and the federal RICO law, and for unjust
enrichment. On September 11, 2014, the court granted the Department
of Justice’s motion to stay discovery for eight months, until May 12, 2015.
Additional information concerning this action is publicly available in court
filings under the docket number 13 Civ. 2811 (S.D.N.Y.) (Castel, J.).
Interchange Fees Litigation
Beginning in 2005, several putative class actions were filed against Citigroup
and Related Parties, together with Visa, MasterCard and other banks and their
affiliates, in various federal district courts and consolidated with other related
cases in a multi-district litigation proceeding before Judge Gleeson in the
United States District Court for the Eastern District of New York (Interchange
MDL). This proceeding is captioned IN RE PAYMENT CARD INTERCHANGE
FEE AND MERCHANT DISCOUNT ANTITRUST LITIGATION.
The plaintiffs, merchants that accept Visa- and MasterCard-branded
payment cards as well as membership associations that claim to represent
certain groups of merchants, allege, among other things, that defendants
have engaged in conspiracies to set the price of interchange and merchant
discount fees on credit and debit card transactions and to restrain trade
through various Visa and MasterCard rules governing merchant conduct,
all in violation of Section 1 of the Sherman Act and certain California
statutes. Supplemental complaints also have been filed against defendants
in the putative class actions alleging that Visa’s and MasterCard’s respective
initial public offerings were anticompetitive and violated Section 7 of the
Clayton Act, and that MasterCard’s initial public offering constituted a
fraudulent conveyance.
On January 14, 2014, the court entered a final judgment approving
the terms of a class settlement providing for, among other things, a total
payment to the class of $6.05 billion; a rebate to merchants participating in
the damages class settlement of 10 basis points on interchange collected for a
period of eight months by the Visa and MasterCard networks; and changes to
certain network rules. A number of objectors have noticed an appeal from the
final class settlement approval order with the United States Court of Appeals
for the Second Circuit. Additional information concerning these consolidated
actions is publicly available in court filings under the docket number MDL
05-1720 (E.D.N.Y.) (Brodie, J.) and 12-4671 (2d Cir.).
Numerous merchants, including large national merchants, have
requested exclusion from the class settlements, and some of those opting out
have filed complaints against Visa, MasterCard, and in some instances one or
more issuing banks. Two of these suits, 7-ELEVEN, INC., ET AL. v. VISA INC.,
ET AL., and SPEEDY STOP FOOD STORES, LLC, ET AL. v. VISA INC., ET AL.,
name Citigroup as a defendant. On December 5, 2014, the Interchange
MDL, including the opt out cases, was transferred from Judge Gleeson to
Judge Brodie. Additional information concerning these actions is publicly
available in court filings under the docket numbers 05-md-1720 (E.D.N.Y.)
(Brodie, J.); 13-cv-4442 (S.D.N.Y.) (Hellerstein, J.), and 13-10-75377A
(Tex. Dist. Ct.).
ISDAFIX-Related Litigation and Other Matters
Regulatory Actions: Government agencies in the U.S., including the
Department of Justice and the CFTC, are conducting investigations or
making inquiries concerning submissions for the global benchmark for
fixed interest rate swaps (ISDAFIX) and trading in products that reference
ISDAFIX. Citigroup is fully cooperating with these and related investigations
and inquiries.
Antitrust and Other Litigation. Beginning in September 2014, various
plaintiffs filed putative class action complaints in the United States District
Court for the Southern District of New York against Citigroup and other U.S.
dollar (USD) ISDAFIX panel banks, which are proceeding on a consolidated
basis. On February 12, 2015, plaintiffs filed an amended complaint alleging
that the defendants colluded to manipulate ISDAFIX, thereby causing the
putative class to suffer losses in connection with USD interest rate derivatives
purchased from the defendants. Plaintiffs assert federal and various
common law claims and seek compensatory damages, treble damages
where authorized by statute, restitution and declaratory and injunctive
relief. Additional information concerning these actions is publicly available
in court filings under the consolidated lead docket number 14 Civ. 7126
(S.D.N.Y.) (Furman, J.).
Money Laundering Inquiries
Citigroup and Related Parties, including Citigroup’s indirect, wholly-owned
subsidiary Banamex USA (BUSA), a California state-chartered bank, 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 (BSA)
and anti-money laundering (AML) requirements under applicable federal
laws and banking regulations. Banamex USA also has received a subpoena
from the FDIC related to its BSA and AML compliance program. Citigroup
and BUSA also have received inquiries and requests for information from
other regulators, including the Financial Crimes Enforcement Network
and the California Department of Business Oversight, concerning BSA- and
AML-related issues. Citigroup is cooperating fully with these inquiries.