8-KOther Events

CITIGROUP INC 8-K Report, Corporate Update (May 20, 2015)

Filed May 20, 2015For Securities:CC-PNC-PR

Summary

Citigroup Inc. (Citi) has announced significant settlements with the U.S. Department of Justice (DOJ) and the Board of Governors of the Federal Reserve System (FRB) to resolve investigations into its foreign exchange (FX) business. These settlements, announced on May 19, 2015, bring a degree of closure to previously disclosed legal matters, impacting the company's compliance and control frameworks. The core of the settlements involves a $925 million fine and a three-year probation period for Citicorp, a subsidiary, pleading guilty to a Sherman Antitrust Act violation. Additionally, Citi will pay a $342 million civil penalty to the FRB and commit to strengthening controls within its FX operations. Importantly, the company stated that these payments are covered by existing legal reserves and will not result in a charge to earnings for the second quarter of 2015.

Key Highlights

  • 1Citigroup reached settlements with the U.S. Department of Justice (DOJ) and the Federal Reserve Board (FRB) to resolve FX business investigations.
  • 2Citicorp, a subsidiary, will plead guilty to a Sherman Antitrust Act violation.
  • 3A total fine of $925 million will be paid to the DOJ, along with a three-year probation for Citicorp.
  • 4Citi will pay a $342 million civil money penalty to the FRB.
  • 5The company will enhance its control framework for the foreign exchange business.
  • 6Payments from these settlements are covered by existing legal reserves.
  • 7No additional charge to earnings is expected for the second quarter of 2015 due to these settlements.

Frequently Asked Questions

The investigations by the U.S. Department of Justice and the Federal Reserve Board were related to Citigroup's foreign exchange (FX) business operations.

Citigroup will pay a total of $1.267 billion ($925 million to the DOJ and $342 million to the FRB). However, the company has stated that these payments are covered by existing legal reserves and will not require a charge to earnings in the second quarter of 2015.

Citicorp, a subsidiary, will plead guilty to a violation of the Sherman Antitrust Act and will be subject to a three-year probation period. The settlement also requires Citigroup to further enhance the control framework governing its foreign exchange business.

This 8-K filing specifically announces settlements with the DOJ and FRB to resolve previously disclosed investigations. While it brings closure to these specific matters, it does not explicitly state if all other potential legal issues related to the FX business have been resolved.