By Christina Rexrode
Citigroup Inc. will pay $394 million to settle its slice of a
private lawsuit from investors who accused the bank of manipulating
foreign-exchange rates, the parties in the case announced.
The agreement, disclosed Wednesday by law firm Scott + Scott and
by Citigroup in a separate release, came on the same day that the
bank and others agreed to plead guilty to similar charges levied by
the U.S. Justice Department.
Altogether, Citigroup disclosed $1.66 billion in new fines and
settlements Wednesday. In addition to the private lawsuit, the bank
will pay $925 million to the Justice Department and $342 million to
the Federal Reserve.
In the Justice Department matter, Citigroup was accused of
engaging in misconduct from December 2007 through January 2013. The
other banks were accused of engaging in the conduct for various
periods with that time frame.
Citigroup is one of the biggest foreign-exchange traders, and
the fine it agreed to pay to settle the private lawsuit is bigger
than those of rivals who have already settled. J.P. Morgan Chase
& Co., the first to settle the private lawsuit, will pay $99.5
million, UBS AG will pay $135 million and Bank of America Corp.
will pay $180 million.
J.P. Morgan, Barclays, RBS and UBS also pleaded guilty to
Justice Department charges on Wednesday related to trading in
foreign exchange or interest rates.
In a memo to employees, Citigroup Chief Executive Michael Corbat
said that the bank had changed monitoring and controls systems and
terminated nine employees as part of an internal review into the
forex misdeeds. "The behavior that resulted in the settlements was
an embarrassment to our firm, and in stark contrast to our values,"
Mr. Corbat wrote, while urging employees to report misbehavior.
"It only takes one person to jeopardize all that we work so hard
for," Mr. Corbat wrote.
In the private lawsuit, Citigroup, J.P. Morgan, UBS and Bank of
America also agreed to cooperate against the other banks that
haven't yet settled. The lawsuit, filed by investors including the
Oklahoma firefighters pension fund and the city of Philadelphia
pension fund, remains outstanding against other banks.
The Wall Street Journal reported last week that Goldman Sachs
Group Inc., which was also part of the lawsuit, is expected to
settle for about $130 million.
The fines for Citigroup will be covered by its existing legal
reserves and won't impact second-quarter earnings, the bank
said.
Write to Christina Rexrode at christina.rexrode@wsj.com
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