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Citigroup Inc.

Case Details

Date Filed: November 10, 2020
Case Number: 1:20-cv-9438
Jurisdiction: Southern District of New York
icon-casetype Case Type: Derivative Shareholder Case

Case Summary

On November 10, 2020, Saxena White filed a shareholder derivative action on behalf of Employees’ Retirement System of the State of Rhode Island for the benefit of Citigroup, Inc., and its shareholders. The Complaint charges current and former members of the Company’s Board of Directors with violations of Section 10(b) and Section 14(a) of the Securities Exchange Act, breach of fiduciary duty, and unjust enrichment.

Citigroup, Inc. is a systemically important financial institution that operates globally through thousands of subsidiaries. Citigroup’s massive size is the result of decades of expansion through which Citigroup acquired hundreds of different banks and financial companies. However, as Citigroup expanded, its leaders failed to integrate their acquisitions into one coherent organization, never unifying or modernizing the company’s internal controls and risk-management systems. Citigroup’s failure to integrate and modernize led it to near collapse during the financial crisis of 2007-2009. The Company was saved only by a nearly $500 billion government bailout. Then, over a decade later, in 2020, Citigroup revealed its lack of internal controls once again when the Company accidentally paid almost $900 million of its own money to lenders expecting a payment from one of Citigroup’s clients.

The Complaint alleges that the Defendants breached their fiduciary duties and violated state and federal law by consciously failing to comply with regulatory standards and government orders mandating enterprise-wide reforms to Citigroup’s internal controls and risk-management systems—failures that have cost Citigroup billions of dollars in regulatory, civil, and criminal penalties. The complaint further alleges that not only did the Board fail to reform Citigroup’s internal controls to ensure regulatory compliance even after a decade of public and private pressure from regulators and shareholders, but the Board also failed to even begin to determine what needs to be done, how long it will take, or how much it might cost.

On December 3, 2020, the Court consolidated multiple related derivative actions into one case, and appointed Employees’ Retirement System of the State of Rhode Island as Co-Lead Plaintiff and Saxena White as Co-Lead Counsel.

On December 24, 2020, Co-Lead Plaintiffs filed their consolidated complaint. On February 8, 2021, the Court stayed the proceedings pending resolution of a motion to dismiss in a separate securities litigation class action filed against Citigroup. The stay of our derivative action will remain in place until the resolution of that motion.