Citibank 2015 Annual Report Download - page 305

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In August and September 2013, plaintiffs in the New York proceedings,
together with their affiliates and principal, filed claims against CGML,
Citibank and Citigroup arising out of the EMI auction in the High Court of
Justice, Queen’s Bench Division and Manchester District Registry Mercantile
Court in Manchester, England. The cases have since been transferred to the
High Court of Justice, Queen’s Bench Division, Commercial Court in London.
On March 7, 2014, the parties to the separate proceedings filed by Terra
Firma in 2013 before the High Court of Justice, Queen’s Bench Division,
consented to the service by plaintiffs of an amended complaint incorporating
the claims that would have proceeded to trial in the United States District
Court for the Southern District of New York in July 2014, had the New
York action not been dismissed. A trial (which is based on allegations of
fraudulent misrepresentations) is scheduled to begin in London on June 7,
2016. Additional information concerning this action is publicly available in
court filings under the claim reference Terra Firma Investments (GP) 2 Ltd.
& Ors v Citigroup Global Markets Ltd. & Ors (CL-2013-000293).
Tribune Company Bankruptcy
Certain Citigroup affiliates have been named as defendants in adversary
proceedings related to the Chapter 11 cases of Tribune Company (Tribune)
filed in the United States Bankruptcy Court for the District of Delaware,
asserting claims arising out of the approximately $11 billion leveraged
buyout of Tribune in 2007. On August 2, 2013, the Litigation Trustee, as
successor plaintiff to the Official Committee of Unsecured Creditors, filed
a fifth amended complaint in the adversary proceeding KIRSCHNER v.
FITZSIMONS, ET AL. The complaint seeks to avoid and recover as actual
fraudulent transfers the transfers of Tribune stock that occurred as a part of
the leveraged buyout. Several Citigroup affiliates are named as “Shareholder
Defendants” and are alleged to have tendered Tribune stock to Tribune as a
part of the buyout.
Several Citigroup affiliates are named as defendants in certain actions
brought by Tribune noteholders, also seeking to recover the transfers of
Tribune stock that occurred as a part of the leveraged buyout, as alleged
state-law constructive fraudulent conveyances. Finally, Citigroup Global
Markets Inc. (CGMI) has been named in a separate action as a defendant in
connection with its role as advisor to Tribune. The noteholders’ claims were
previously dismissed, and an appeal to the United States Court of Appeals for
the Second Circuit is pending. A motion to dismiss the action against CGMI
in its role as advisor to Tribune is pending.
In the FITZSIMONS action, claims against certain Citigroup affiliates
have been dismissed or reduced in amount by various orders. 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, CGML, Citicorp
North America Inc. and Citibank, as well as Markit, ISDA, and 12 other
investment bank dealer groups, a statement of objections alleging that Citi
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 set forth the EC’s
preliminary conclusions, did not prejudge the final outcome of the case,
and did not benefit from the review and consideration of Citi’s arguments
and defenses. Thereafter, Citi filed a reply and made oral submissions to
the EC. On December 4, 2015, the EC informed Citi that it had closed its
proceeding against Citi and the other investment bank dealer groups, without
further action.
In July 2009 and September 2011, the Antitrust Division of the U.S.
Department of Justice served Civil Investigative Demands (CIDs) on Citi
concerning potential anticompetitive conduct in the CDS industry.
In addition, putative class action complaints were filed by various
entities against Citigroup, CGMI and Citibank, 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
in the Southern District of New York for coordinated or consolidated
pretrial proceedings before Judge Denise Cote. On September 30, 2015, the
defendants, including Citigroup and Related Parties, entered into settlement
agreements to settle all claims of the putative class, and on October 29,
2015, the court granted plaintiffs’ motion for preliminary approval of the
proposed settlements. 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. and
in other jurisdictions are conducting investigations or making inquiries
regarding Citigroup’s foreign exchange business. Citigroup is fully
cooperating with these and related investigations and inquiries.
Antitrust and Other Litigation: Numerous foreign exchange dealers,
including Citigroup and Citibank, 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