A judge has ordered Citigroup Inc. (C) to give over certain internal records to the Oklahoma Firefighters Pension and Retirement System related to the bank’s Banamex unit. The pension fund is a Citigroup shareholder.
Earlier this year, Citigroup revealed that its retail bank in Mexico City had been deceived in an accounting fraud involving Oceanografia, an oil-services company. Meantime, federal prosecutors have also been looking into whether Banamex USA did enough to protect itself so that customers couldn’t use it to launder money. Now, the U.S. Department of Justice and the Securities and Exchange Commission are examining Banamex USA and Banamex.
The Oklahoma fund submitted a complaint earlier this year asking to be able to look into whether Citigroup board members and executives had violated their fiduciary duty to shareholders related to the loan fraud scandal involving the Mexican unit. In its complaint, the pension fund alleged that Citigroup’s officers and directors may have known of the risks or existence of illegal activities and fraud but ignored them, as well as the likely civil and criminal penalties that could result.
Citigroup has since responded, contending that the Oklahoma fund did not demonstrate credible grounds for inferring the alleged wrongdoing and mismanagement. The bank said that it acted right away to remedy the problems at Banamex once they were identified.
Although Judge Abigail LeGrow ordered Citigroup to hand over certain bank records to the Oklahoma fund, she did not rule on whether the bank or its executives engaged in wrongdoing. However, she said that the issues stemming from the Banamex claims did have consequences.
Contact our securities lawyers if you suspect institutional investor fraud.
Citigroup Ordered to Turn Over Banamex Records, The Wall Street Journal, October 1, 2014
Citigroup ordered to turn over Banamex files to pension fund, Bloomberg, October 1, 2014
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