Citibank 2015 Annual Report Download - page 309

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ISDAFIX-Related Litigation and Other Matters
Regulatory Actions: Government and regulatory agencies in the U.S.,
including 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. On
April 13, 2015, defendants filed a motion to dismiss the claims in plaintiffs’
amended consolidated complaint. 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
Regulatory Actions: 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 BUSA, Citibank and
related parties’ compliance with Bank Secrecy Act (BSA) and anti-money
laundering (AML) requirements under applicable federal laws and banking
regulations. Citigroup and BUSA also have received inquiries and requests
for information from other regulators, including the Financial Crimes
Enforcement Network, concerning BSA- and AML-related issues. Citigroup is
cooperating fully with these inquiries.
Citibank has received a subpoena from the United States Attorney for the
Eastern District of New York in connection with its investigation of alleged
bribery, corruption and money laundering associated with the Federation
Internationale de Football Association (FIFA), and the potential involvement
of financial institutions in that activity. The subpoena requests information
relating to, among other things, banking relationships and transactions at
Citibank and its affiliates associated with certain individuals and entities
identified as having had involvement with the alleged corrupt conduct. Citi is
cooperating with the authorities in this matter.
Derivative Actions and Related Proceedings: On September 22, 2015,
a derivative action captioned FIREMAN’S RETIREMENT SYSTEM OF ST.
LOUIS, ET AL. v. CORBAT, ET AL. was filed in the United States District Court
for the Southern District of New York on behalf of Citigroup (as nominal
defendant) against certain of Citigroup’s and certain of its affiliates’ present
and former directors and officers. The plaintiffs asserted claims derivatively
for violation of Section 14(a) of the Securities Exchange Act of 1934,
breach of fiduciary duty, waste of corporate assets, and unjust enrichment
in connection with the defendants’ alleged failure to exercise appropriate
oversight and management of BSA and AML laws and regulations and
related consent decrees concerning Citigroup’s subsidiaries Banco Nacional
de Mexico, or Banamex, and BUSA. On December 14, 2015, plaintiffs,
with the permission of the court, filed an amended complaint naming
additional present and former directors and officers of Citigroup affiliates
as defendants. Defendants’ motion to dismiss the amended complaint was
filed on January 22, 2016. Additional information concerning this action
is publicly available in court filings under the docket number 15 Civ. 7501
(S.D.N.Y.) (Furman, J.).
Oceanografia Fraud and Related Matters
Regulatory Actions: As a result of Citigroup’s announcement in the first
quarter of 2014 of a fraud discovered in a Petróleos Mexicanos (Pemex)
supplier program involving Oceanografía SA de CV (OSA), a Mexican oil
services company and a key supplier to Pemex, the SEC commenced a formal
investigation and the U.S. Department of Justice requested information
regarding Banamex’s dealings with OSA. The SEC inquiry has included
requests for documents and witness testimony. Citi continues to cooperate
fully with these inquiries.
Derivative Actions and Related Proceedings: Beginning in April 2014,
Citigroup has been named as a defendant in two complaints filed by its
stockholders seeking to inspect Citigroup’s books and records pursuant to
Section 220 of Chapter 8 of the Delaware Corporations Law with regard
to various matters, including the OSA fraud. On April 24, 2015, in the
action brought by Oklahoma Firefighters Pension & Retirement System,
the Court of Chancery issued a decision adopting the Master in Chancery’s
September 30, 2014 recommendation granting in part and denying in
part plaintiff’s request to inspect Citigroup’s books and records. On May 5,
2015, Citigroup answered a similar complaint filed by Key West Municipal
Firefighters & Police Officers’ Retirement Trust Fund. Additional information
concerning these actions is publicly available in court filings under the
docket numbers C.A. No. 9587-ML (Del. Ch.) (LeGrow, M.) and C.A. No.
10468-ML (Del. Ch.) (LeGrow, M.).
Parmalat Litigation and Related Matters
On July 29, 2004, Dr. Enrico Bondi, the Extraordinary Commissioner
appointed under Italian law to oversee the administration of various
Parmalat companies, filed a complaint in New Jersey state court against
Citigroup and Related Parties alleging, among other things, that the
defendants “facilitated” a number of frauds by Parmalat insiders. On
October 20, 2008, following trial, a jury rendered a verdict in Citigroup’s
favor on Parmalat’s claims and in favor of Citibank, N.A. on three
counterclaims. Parmalat has exhausted all appeals, and the judgment is now
final. Additional information concerning this action is publicly available
in court filings under the docket number A-2654-08T2 (N.J. Sup. Ct.).