Citibank 2015 Annual Report Download - page 303

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The majority of these matters have been resolved through settlement or
otherwise. As of December 31, 2015, the aggregate original purchase amount
of the purchases at issue in the pending litigations was approximately
$1.2 billion, and the aggregate original purchase amount of the purchases
covered by tolling agreements with investors threatening litigation was
approximately $500 million. Additional information concerning certain of
these actions is publicly available in court filings under the docket numbers
13-1729-II (Tenn. Ch. Ct.) (McCoy, C.), 650212/2012 (N.Y. Sup. Ct.)
(Kornreich, J.), and 12 Civ. 3868 (S.D.N.Y.) (Forrest, J.).
Mortgage-Backed Security Repurchase Claims: Various parties to
MBS securitizations and other interested parties have asserted that certain
Citigroup affiliates breached representations and warranties made in
connection with mortgage loans sold into securitization trusts (private-
label securitizations). Typically, these claims are based on allegations
that securitized mortgages were not underwritten in accordance with the
applicable underwriting standards. Citigroup also has received numerous
inquiries, demands for loan files, and requests to toll (extend) the applicable
statutes of limitation for representation and warranty claims relating to its
private-label securitizations. These inquiries, demands and requests have
been made by trustees of securitization trusts and others.
On April 7, 2014, Citigroup entered into an agreement with 18
institutional investors represented by Gibbs & Bruns LLP regarding the
resolution of representation and warranty repurchase claims related
to certain legacy securitizations. Pursuant to the agreement, Citigroup
made a binding offer to the trustees of 68 Citigroup-sponsored mortgage
securitization trusts to pay $1.125 billion to the trusts to resolve these claims,
plus certain fees and expenses. The 68 trusts covered by the agreement
represent all of the trusts established by Citigroup’s legacy Securities and
Banking business during 2005-2008 for which Citigroup affiliates made
representations and warranties to the trusts. The trustees accepted the
settlement for 64 trusts in whole, and four in part. Pursuant to the terms of
the settlement agreement, the trustees’ acceptance was subject to a judicial
approval proceeding. On December 18, 2015, the court filed a decision and
order approving the trustees’ entry into the settlement and finding that the
trustees, in entering the settlement, had exercised their authority reasonably
and in good faith. Additional information concerning this proceeding 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 that were excluded from the
April 7, 2014 settlement in connection with four private-label securitizations.
Citigroup has reached an agreement with the trustees to resolve three of these
actions, and those actions were dismissed with prejudice on January 26, 2016.
The remaining three actions are in various stages of discovery. In the
aggregate, plaintiffs are asserting repurchase claims in the remaining
actions as to approximately 2,900 loans that were securitized into these
three 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.), 653919/2014 (N.Y. Sup. Ct.),
653929/2014 (N.Y. Sup. Ct.), and 653930/2014 (N.Y. Sup. Ct.).
Mortgage-Backed Securities Trustee Actions: On June 18, 2014, a group
of investors in 48 RMBS trusts for which Citibank 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 RMBS trustees, alleges
that Citibank failed to pursue contractual remedies against securitization
sponsors and servicers. This action was withdrawn without prejudice,
effective December 17, 2014. 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 for which Citibank allegedly served or currently serves as trustee. On
September 8, 2015, the United States District Court for the Southern District
of New York dismissed all claims as to 24 of the 27 trusts and allowed certain
of the claims to proceed as to the other three trusts. 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 November 24, 2015, largely the same group of investors filed another
action in the New York State Supreme Court, captioned FIXED INCOME
SHARES: SERIES M, ET AL. V. CITIBANK N.A., related to the 24 trusts
dismissed from the federal court action and one additional trust, asserting
claims similar to the original complaint filed in state court. Additional
information concerning this action is publicly available in court filings
under the docket number 653891/2015 (N.Y. Sup. Ct.) (Ramos, J.).
On August 19, 2015, the Federal Deposit Insurance Corporation as
receiver for a financial institution filed a civil action against Citibank in the
United States District Court for the Southern District of New York, captioned
FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR
GUARANTY BANK V. CITIBANK N.A. The complaint concerns one RMBS trust
for which Citibank formerly served as trustee, and alleges that Citibank failed
to pursue contractual remedies against the sponsor and servicers of that trust.
Additional information concerning this action is publicly available in court
filings under the docket number 15-cv-6574 (S.D.N.Y.) (Carter, J.).
Counterparty and Investor Actions
In 2010, Abu Dhabi Investment Authority (ADIA) commenced an
arbitration (ADIA I) against Citigroup 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. 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.