In an updated complaint submitted late Thursday, a former managing director of Citigroup (C) accused the chief operating officer of deliberate deceit. The director claimed that she was given the pink slip for refusing to mislead a federal regulator over the bank’s risk management.
According to Kathleen Martin, Citi’s COO, Anand Selva, allegedly wanted to misreport Citi’s metrics to deceive the OCC into thinking the bank was meeting its obligations under the terms of its 2020 risk management settlement agreement, which was worth $400 million.
According to Martin’s updated federal lawsuit filed in Manhattan court, Selva was worried that publishing truthful facts would make them “look bad.”
The third-largest U.S. bank, according to Martin, would have faced enormous legal and financial implications—possibly including significant additional fines—had the misreporting been effective.
Martin added that it would have misled both shareholders and the public. Additionally, the updated lawsuit now includes concrete examples of Citigroup’s failure to comply.
Among these was the $135.6 million penalty levied by the OCC and the Federal Reserve on July 10 for the bank’s “insufficient progress” in resolving issues highlighted in 2020.
The fine was Citigroup’s latest setback for its chief executive, Jane Fraser, who has prioritized streamlining the company and rectifying its regulatory shortcomings.
The company claims that Martin’s ineffective leadership and lack of participation led to her dismissal from her position as interim data transformation chair in September of last year.
Additionally, the bank has denied her claims and said that even if they were accurate, her whistleblower would not have been protected by the federal Sarbanes-Oxley Act of 2002.
Citigroup must reply to the revised complaint by August 8th. On June 27, the bank attempted to have Martin’s initial lawsuit dismissed, but according to federal legislation, she was able to revise it once.
