Fired Citigroup banker says COO intended to deceive regulator on bank’s metrics

NEW YORK (Reuters) – A former Citigroup managing director who said she was fired because she refused to mislead a federal regulator about the bank’s risk management accused Citigroup’s chief operating officer of intentional deception, according to an amended lawsuit filed late on Thursday.

WHAT HAPPENED

Kathleen Martin said Chief Operating Officer Anand Selva “wanted to misreport Citi’s metrics to deceive” the Office of the Comptroller of the Currency into believing the bank was complying with its $400 million settlement agreement in 2020 addressing risk management shortfalls.

Martin’s amended complaint in Manhattan federal court repeated the claim that Selva was concerned that reporting accurate information would “make us look bad.”

WHY IT’S IMPORTANT

Martin said a successful misreporting would have also deceived shareholders and the public, while failure would have had “enormous legal and financial implications” for the third-largest U.S. bank, perhaps including “major” new fines.

The amended complaint also added specific illustrations of compliance shortfalls at Citigroup.

These included the $135.6 million fine that the OCC and Federal Reserve imposed on July 10 over the bank’s “insufficient progress” in addressing problems identified in 2020.

That fine was the latest blow for Chief Executive Jane Fraser, who has focused on making Citigroup leaner and made cleaning up its regulatory failings a top priority.

THE RESPONSE

Citigroup had no immediate comment after market hours.

It has said it fired Martin last September because she lacked leadership and engagement skills for her job as interim data transformation chair.

The bank has also said her allegations were untrue, and that if they were true her whistleblowing was not protected activity under the federal Sarbanes-Oxley governance law.

WHAT’S NEXT

Citigroup has until Aug. 8 to respond to the amended complaint. The bank had sought on June 27 to dismiss Martin’s original complaint, but federal law allowed her to amend it once.

The case is Martin v. Citibank NA et al, U.S. District Court, Southern District of New York, No. 24-03949.