Citibank 2014 Annual Report Download - page 315

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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. 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.
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.