After six major international banks were hit with nearly $6 billion in fines earlier today for their participation in a conspiracy to manipulate the FX markets, Citi now announced that it has also reached a separate agreement to settle related private US class action claims for a payment of $394 million, subject to court approval.
This private arrangement is on top of Citi’s settlements with the US Department of Justice (DOJ) and the Federal Reserve to resolve investigations into its foreign exchange business. The settlement with the DOJ includes a guilty plea by Citicorp, a subsidiary of Citigroup Inc., to a violation of the Sherman Antitrust Act and fine of $925 million. The settlement with the Fed includes the entry of a cease and desist order and a civil money penalty of $342 million.
Citi says it expects to maintain its licenses and does not expect a material impact on its operations or ability to serve its clients. The payments required for each of the settlements announced by Citi today are covered by existing legal reserves and will not require a charge to earnings in the second quarter of 2015.
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Michael Corbat, Chief Executive Officer of Citi, said, “The behavior that resulted in the settlements we announced today is an embarrassment to our firm, and stands in stark contrast to Citi’s values. We began to take action quickly after becoming aware of these violations of our Code of Conduct and policies, and our internal investigation has so far resulted in nine terminations and additional disciplinary actions.
“We will learn from this experience and continue building upon the changes that we have already made to our systems, controls, and monitoring processes. Fostering a culture of ethical behavior has been, and continues to be, a top priority for Citi,” Mr. Corbat concluded.
Citi has now resolved a significant number of its foreign exchange investigations. In November 2014, Citi announced agreements to settle investigations into its foreign exchange business by the U.K. Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC).