Appeals Court Rejects Citigroup Whistleblower's Bid For Share In $400M Fine: Report

Yesterday, a federal appeals court reportedly ruled that Citigroup Inc. C vice president is not entitled to a portion of the $400 million civil fine the bank agreed to pay in October 2020 due to its risk management failures.

The 2nd U.S. Circuit Court of Appeals in Manhattan ruled that Tamika Miller did not prove her whistleblowing on Citigroup’s audit report alterations warranted a share of the $400 million penalty, which resulted from the bank’s settlement with the Federal Reserve and the OCC, reported Reuters.

Miller argued that Citigroup’s actions breached its $700 million 2015 settlement with the Consumer Financial Protection Bureau over its credit card business and its $35 million settlement with the OCC on the same day regarding marketing practices.

As per the report, Circuit Judge Denny Chin, writing for a three-judge panel, stated that federal law gave the OCC discretion, but not a duty, to fine Citigroup over the audit reports. He concluded that this undermined Miller’s claim that Citigroup, the third-largest U.S. bank, concealed its compliance failures to evade a government-imposed fine.

Chin also said that the lawsuit by Miller, a Citigroup risk management employee since 2014, was “bereft of the details needed to provide Citibank with ‘fair notice’ of her claim, and instead resembles an attempt to use the litigation process to discover hypothetical wrongdoing.”

Miller sued under the federal False Claims Act, which allows whistleblowers to sue on behalf of the government and receive a share of the recoveries, usually between 15% and 30%.

In 2020, the Federal Reserve imposed a penalty of $400 million on Citigroup and asked the latter to “correct several longstanding deficiencies.”

Last month, Citigroup reportedly breached a U.S. Federal Reserve rule on intercompany transactions, leading to errors in its internal liquidity reporting.

Citigroup stock has gained around 23% in the past 12 months. Investors can gain access to the stock via First Trust Nasdaq Bank ETF FTXO and Series Portfolios Trust InfraCap Equity Income Fund ETF ICAP.

C Price Action: Citigroup shares are up 2.23% at $57.82 premarket at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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