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Citigroup Inc. is an investment firm headquartered in New York with more than $700 billion in assets under management. Its shares trade on the New York Stock Exchange (NYSE), and its largest shareholders include other major investment firms like The Vanguard Group, BlackRock Fund Advisors, and Berkshire Hathaway, Inc.
But, despite its size and its large institutional investors, Citigroup has still faced several scandals in recent years. It also routinely faces complaints from investors in FINRA arbitration. If you are a Citigroup customer and you have concerns about investment fraud, you may be entitled to recover your losses, and you should speak with an attorney about your legal rights.
Background Information on Citigroup
Citigroup is one of the world’s largest investment firms. It is the parent company of Citicorp, a New York-based bank with a 200-year history. However, it was formed just about 25 years ago when Citicorp merged with Travelers in a deal worth approximately $76 billion.
Until 2006, Citigroup operated under the direction of Sandy Weill. While Weill is known as one of the most influential individuals in the history of Wall Street, he is also known as one of the 25 people who are responsible for the 2008 financial crisis. Weill was succeeded as Citigroup’s CEO by Peter Cohen, the youngest person ever to be at the helm of a major Wall Street firm. Today, Citigroup’s CEO is Jane Fraser, a Harvard Business School graduate who was previously a partner at McKinsey & Company. While many other investment firms struggled in 2022 (and cut their CEOs’ pay as a result), Fraser led Citigroup in a positive direction and received a salary increase of $24.5 million as a result.
Examples of Claims and Complaints Against Citigroup
Despite Citigroup’s recent profitability, the firm has had more than its fair share of struggles in recent years. It has also been plagued by scandal both during and after its time under Weill. Some examples of federal enforcement proceedings against Citigroup include:
- In 2003, Citigroup agreed to pay $120 million to the U.S. Securities and Exchange Commission (SEC) to settle allegations that the firm had helped Enron and Dynegy commit widespread fraud. According to the SEC, Citigroup “helped Enron mislead its investors by characterizing what were essentially loan proceeds as cash from operating activities . . . [and assisted] Dynegy Inc. in manipulating [its] financial statements through similar conduct.”
- In 2011, the SEC filed a complaint against Citigroup alleging that the firm misled investors about a $1 billion collateralized debt organization during the U.S. housing market crisis. As alleged by the SEC, Citigroup took a short position that would allow the firm to reap profits in the event of a downturn that was “adverse to the interests of [its] investors.” Citigroup paid a total of $285 million after being ordered to do so by the SEC.
- In 2015, the Consumer Financial Protection Bureau (CFPB) ordered Citibank, a Citigroup subsidiary, to pay $700 million for engaging in illegal credit card practices. According to the CFPB, Citibank defrauded customers by engaging in a variety of illegal practices involving “deceptive marketing, billing, and administration of debt protection and credit monitoring add-on products.”
- In 2022, Citigroup joined the list of investment firms facing scrutiny from the SEC related to alleged improper employee communications. In a public filing, the firm acknowledged that the SEC was investigating whether it had met its recordkeeping obligations with respect to these communications. If investment firms do not adequately track their employees’ communications, they cannot prevent—or respond to—instances of their employees providing false or misleading information to customers.
Along with these federal enforcement proceedings, Citigroup has faced numerous complaints from investors. Like all investment firms, Citigroup is required to resolve investor claims through arbitration with the Financial Industry Regulatory Authority (FINRA). According to FINRA’s BrokerCheck, Citigroup has well over 600 disclosures related to customer arbitration claims, and these claims have resulted in millions upon millions of dollars in liability.
How to File for Brokerage Firm Arbitration Against Citigroup
Let’s say you have concerns about investment fraud as a Citigroup customer. What should you do?
As a Citigroup customer, you have the right to file a claim to recover your fraudulent investment losses in FINRA arbitration. All brokerage firms are required to register with FINRA, and as a condition of registration, they must consent to arbitration for the resolution of customer disputes. While filing a lawsuit may also be an option, FINRA arbitration is quicker and less costly than going to court in most cases.
In FINRA arbitration, defrauded investors can seek the same remedies that they can seek in court. This means that, by filing for FINRA arbitration, investors can seek to recover:
- Loss of principal
- Trading losses
- Pre-judgment interest
- Punitive damages
Calculating the value of a FINRA arbitration claim is not an easy process, and seeking punitive damage requires evidence above and beyond that required to recoup fraudulent losses. If you have a claim against Citigroup, an experienced investor lawyer will be able to calculate the value of your claim and present all of the evidence required to secure a favorable arbitration award (though, of course, a favorable outcome is not guaranteed).
Investors have up to six years to initiate FINRA arbitration in most cases. This six-year period runs from the date of the act or omission that causes an investor’s losses. However, once you discover that you may be a victim of investment fraud, it is important that you consult with a lawyer as soon as possible. It takes time to build a successful claim, and the longer you wait to take action, the more difficult it could become to prove the losses you are entitled to recover.
Talk to an Investor Lawyer About Filing a FINRA Arbitration Claim
If you need to know more about pursuing brokerage firm arbitration against Citigroup, we invite you to get in touch. To schedule a free and confidential consultation with an experienced lawyer at Zamansky LLC, please call 212-742-1414 or send us your contact information online today.