NEW YORK (Reuters) – A former Citigroup (C) managing director who claimed she was terminated for refusing to mislead a federal regulator about the bank’s risk management has accused Citigroup’s chief operating officer of deliberate deception, according to a revised lawsuit filed recently.
What happened
Kathleen Martin alleged that Chief Operating Officer Anand Selva sought to manipulate Citi’s metrics to deceive the Office of the Comptroller of the Currency into believing the bank was meeting its $400 million settlement agreement in 2020 regarding risk management deficiencies.
In her amended complaint in Manhattan federal court, Martin reiterated the assertion that Selva was apprehensive that providing accurate information would tarnish the bank’s image.
Why it’s important
Martin stated that a successful misrepresentation would have misled shareholders and the public, while a failure would have resulted in significant legal and financial consequences for the third-largest U.S. bank, potentially including substantial new fines.
The updated complaint also highlighted specific instances of non-compliance at Citigroup, such as the $135.6 million penalty imposed by the OCC and Federal Reserve on July 10 for the bank’s insufficient progress in addressing identified issues in 2020.
This penalty added to the challenges faced by Chief Executive Jane Fraser, who has been focused on streamlining Citigroup and prioritizing the resolution of regulatory shortcomings.
The response
Citigroup did not provide an immediate response after market hours.
The bank previously stated that Martin was terminated in September due to her perceived lack of leadership and engagement skills for her role as interim data transformation chair.
Citigroup also denied Martin’s allegations, contending that even if they were true, her whistleblowing did not qualify as protected activity under the federal Sarbanes-Oxley governance law.
What’s next
Citigroup is required to respond to the amended complaint by August 8. The bank had attempted to dismiss Martin’s original complaint on June 27, but federal law permitted her to make amendments once.
The case is Martin v. Citibank NA et al, U.S. District Court, Southern District of New York, No. 24-03949.
(Reporting by Jonathan Stempel; Editing by Sandra Maler)