A federal appeals court has rejected a claim by a Citigroup Inc vice president for a share of a $400 million civil fine paid by the bank in October 2020. The fine was related to risk management failures at the third-largest U.S. bank.
The 2nd U.S. Circuit Court of Appeals in Manhattan ruled that Tamika Miller, a Citigroup risk management employee since 2014, did not demonstrate that her whistleblowing activities regarding alleged audit report alterations necessitated the bank's penalty payment. This settlement was reached with the Federal Reserve and the Office of the Comptroller of the Currency (OCC).
Miller argued that Citigroup's actions violated two previous settlements: a $700 million agreement with the Consumer Financial Protection Bureau in 2015 concerning its credit card business, and a $35 million settlement with the OCC on the same day regarding marketing practices.
Circuit Judge Denny Chin, writing for a three-judge panel, stated that federal law granted the OCC discretion, but not an obligation, to fine Citigroup over the audit reports. This undermined Miller's claim that the bank concealed compliance failures to avoid a fine that the government was entitled to collect.
The court also found Miller's lawsuit "bereft of the details needed to provide Citibank with 'fair notice' of her claim," suggesting it resembled an attempt to uncover hypothetical wrongdoing through litigation.
Miller filed her lawsuit under the False Claims Act, a law enacted in 1863 during the American Civil War. This legislation allows whistleblowers to sue on behalf of the government and potentially share in recoveries, typically ranging from 15% to 30%. The Act has recovered over $70 billion for the U.S. government since 1986.
Miller's case was classified as a "reverse false claim," alleging that Citigroup retained money it should have paid, rather than the more common scenario where companies receive unentitled funds.
"Cleaning up the bank's regulatory failings is a top priority."
Jane Fraser, who became Citigroup's CEO in March 2021 and is the first female CEO of a major Wall Street bank, has emphasized addressing the bank's regulatory issues as a key focus since taking the helm.
Citigroup, formed in 1998 through the merger of Citicorp and Travelers Group, has faced various regulatory challenges. The bank's headquarters are located in New York City, where it continues to navigate the complex landscape of financial regulations under the oversight of agencies such as the Federal Reserve, established in 1913, and the Consumer Financial Protection Bureau, created in 2011 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.