By CHRISTINA REXRODE
May 20, 2015 1:39 p.m. ET
Bank to pay $394 million to settle suit, part of $1.66 billion in settlements announced Wednesday
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
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 AGwill 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 email@example.com