Citigroup Seeks Dismissal of Whistleblower Lawsuit by Former MD

Citigroup has requested a judge to dismiss a lawsuit filed by Kathleen Martin, a former managing director, who alleges she was fired in retaliation for refusing to lie to regulators about the bank’s risk management practices.

Citigroup, the third-largest U.S. bank, argues that Martin was terminated because she lacked the leadership and engagement skills required for her role as interim data transformation chair.

Citigroup Defense:

In a Thursday night filing in Manhattan federal court, Citigroup stated that Martin’s allegations were false. The bank contends that even if Martin’s claims were true, her whistleblowing activities are not protected under the federal Sarbanes-Oxley governance law.

According to Citigroup, Martin has not specified which provision of Sarbanes-Oxley was violated and argues that the law does not protect employees who merely “push back” against supervisors. Additionally, Citigroup asserts that Martin did not allege any fraud or intent to deceive shareholders.

Plaintiff’s Argument:

Kathleen Martin’s lawyer, Valdi Licul of the Wigdor law firm, has rejected Citigroup’s defense, stating, “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.”

Martin claims Citigroup hired her in 2021 to address and rectify the bank’s unlawful data maintenance practices and prevent further legal liabilities. This hiring came a year after Citigroup agreed to pay $400 million to federal regulators due to shortcomings in risk management.

Martin alleges that Chief Operating Officer Anand Selva pressured her to falsify and hide key information from the Office of the Comptroller of the Currency (OCC) to avoid making the bank “look bad.”

Context and Citigroup’s Internal Efforts:

Chief Executive Jane Fraser informed investors on June 18 that Citigroup was intensifying efforts to “modernize” its automation and data reporting to meet regulatory requirements.

She acknowledged that progress had been slow in some areas. This internal push highlights the bank’s ongoing regulatory scrutiny and its commitment to addressing these concerns.

Martin’s Legal Action:

Martin seeks reinstatement, back pay and benefits, and damages for reputational and emotional harm. The case, Martin v. Citibank NA et al., is being heard in the U.S. District Court for the Southern District of New York, case number 24-03949.

Citigroup has declined to provide additional comments on the case, and COO Anand Selva is also named as a defendant, though CEO Jane Fraser is not.