Citibank 2015 Annual Report Download - page 304

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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. 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
Citigroup and Related Parties have been named as defendants in a putative
class action lawsuit filed in October 2012 on behalf of investors in CSO Ltd.,
CSO US Ltd., and Corporate Special Opportunities Ltd., whose investments
were managed indirectly by a Citigroup affiliate. Plaintiffs asserted a
variety of state common law claims, alleging that they and other investors
were misled into investing in the funds and, later, not redeeming their
investments. The complaint sought to recover more than $400 million on
behalf of a putative class of investors. On August 10, 2015, the parties entered
into an agreement providing for a class action settlement of the litigation.
The court held a final settlement hearing on December 17, 2015 and
entered an order approving the settlement on January 28, 2016. Additional
information concerning this action is publicly available in court filings
under the docket number 12-cv-7717 (S.D.N.Y.) (Woods, J.).
Auction Rate Securities-Related Litigation and
Other Matters
Citigroup and Related Parties have been named as defendants in numerous
actions and proceedings brought by Citigroup shareholders and purchasers or
issuers of auction rate securities (ARS) and an issuer of variable rate demand
obligations, asserting federal and state law claims arising from the collapse
of the market in 2008, which plaintiffs contend Citigroup and other ARS
underwriters and broker-dealers foresaw or should have foreseen, but failed
adequately to disclose. Many of these matters have been dismissed or settled.
Most of the remaining matters are in arbitrations pending before FINRA.
Lehman Brothers Bankruptcy Proceedings
On February 8, 2012, Citibank and certain Citigroup affiliates were named as
defendants in an adversary proceeding asserting objections to proofs of claim
totaling approximately $2.6 billion filed by Citibank and those affiliates,
and claims under federal bankruptcy and state law to recover $2 billion
deposited by Lehman Brothers Holdings Inc. (LBHI) with Citibank against
which Citibank asserts a right of setoff. Plaintiffs also sought avoidance
of a $500 million transfer and an amendment to a guarantee in favor of
Citibank and other relief; plaintiffs dismissed, with prejudice, their claim to
avoid the $500 million transfer pursuant to a stipulation entered by the court
on March 12, 2015. Plaintiffs filed various amended complaints asserting
additional claims and factual allegations, and amending certain previously
asserted claims.
Discovery related to the remaining claims is ongoing. Additional
information concerning this action is publicly available in court filings
under the docket numbers 12-01044 and 08-13555 (Bankr. S.D.N.Y.)
(Chapman, J.).
On July 21, 2014, an adversary proceeding was filed on behalf of
Lehman Brothers Finance AG against Citibank, Citibank Korea Inc. and
CGML asserting that defendants improperly have withheld termination
payments under certain derivatives contracts. An amended complaint was
filed by plaintiff on August 6, 2014. Plaintiff seeks to recover approximately
$70 million, plus interest. Discovery is ongoing. Additional information
concerning this action is publicly available in court filings under the docket
numbers 14-02050 and 09-10583 (Bankr. S.D.N.Y.) (Chapman, J.).
Terra Firma Litigation
In December 2009, the general partners of two related private equity funds
filed a complaint in New York state court, subsequently removed to the United
States District Court for the Southern District of New York, asserting multi-
billion-dollar claims against Citigroup and certain of its affiliates arising
out of the May 2007 auction of the music company, EMI, in which Citigroup
affiliates acted as advisor to EMI and as a lender to plaintiffs’ acquisition
vehicle. Following a jury trial, a verdict was returned in favor of Citigroup
on November 4, 2010. Plaintiffs appealed from the entry of the judgment.
On May 31, 2013, the United States Court of Appeals for the Second Circuit
vacated the November 2010 jury verdict in favor of the defendants and
ordered that the case be retried. On March 7, 2014, the parties stipulated to
the dismissal of all remaining claims in the action, without prejudice to
plaintiffs’ rights to re-file those claims in England. Additional information
concerning this action is publicly available in court filings under the docket
numbers 09 Civ. 10459 (S.D.N.Y.) (Rakoff, J.) and 11-0126-cv (2d Cir.).