Citigroup urges dismissal of ex-managing director’s whistleblower lawsuit

11:43 am Friday, June 28th, 2024

By Saeed Azhar and Jonathan Stempel

NEW YORK (Reuters) -Citigroup urged a judge to dismiss a lawsuit by a former managing director who accused the bank of firing her in retaliation for her refusal to lie to regulators about its risk management practices. The third-largest U.S. bank said it terminated Kathleen Martin in November because she lacked leadership and engagement skills for her job as interim data transformation chair, according to a Thursday night filing in Manhattan federal court. Citigroup also said Martin’s allegations were not true, and that even if they were her whistleblowing was not protected activity under the federal Sarbanes-Oxley governance law.

Martin’s lawyer Valdi Licul, from the Wigdor law firm, rejected Citigroup’s defense.

“It is astounding that Citi can take the position that they are legally permitted to fire an employee who has made complaints about false statements to regulators,” Licul said.

Chief Executive Jane Fraser told investors on June 18 that the bank was stepping up efforts to “modernize” its automation and data reporting to address regulatory concerns, and acknowledged that “progress has been too slow” in some areas.

Martin said Citigroup hired her to “clean up its unlawful data maintenance practices and avoid further legal liability” in 2021, a year after the bank agreed to pay $400 million to federal regulators because of risk management shortfalls.

But she said Chief Operating Officer Anand Selva wanted her to falsify and hide key information about the bank’s metrics from one of its regulators, the Office of the Comptroller of the Currency (OCC), because it would “make us look bad.”

In seeking a dismissal, Citigroup said Martin did not explain which Sarbanes-Oxley provision she believed it violated, and the law does not protect employees who simply “push back” against supervisors.

Citigroup also said Martin made no allegations that it committed fraud or intended to deceive shareholders.

The New York-based bank declined additional comment on Friday. Selva is also a defendant, while Fraser is not.

Martin is seeking reinstatement, back pay and benefits, and damages for reputational and emotional harm.

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

(Reporting by Saeed Azhar and Jonathan Stempel in New York, editing by Lananh Nguyen and Chizu Nomiyama)