Citigroup urges Reuters to dismiss former executive’s whistleblower lawsuit

Authors: Saeed Azhar and Jonathan Stempel

NEW YORK (Reuters) – Citigroup urged a judge to dismiss a lawsuit by a former executive who accused the bank of firing her in retaliation for refusing to lie to regulators about its risk management practices. The third-largest U.S. bank said it terminated Kathleen Martin’s contract in November because she lacked leadership skills and commitment as interim data transformation chair, according to a Thursday evening filing in federal court in Manhattan. Citigroup also said Martin’s allegations were false and that even if they were whistleblowing, they were not protected activities under the federal Sarbanes-Oxley Act.

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

“It is astonishing that Citi can take the position that it can legally terminate an employee who has filed false statement complaints with regulators,” Licul said.

On June 18, CEO Jane Fraser told investors that the bank was stepping up efforts to “modernize” its automation and data reporting to address regulatory issues, and admitted that “progress is too slow” in some areas.

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

However, 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 have put us in a bad light.”

In filing its dismissal request, Citigroup said Martin did not explain which Sarbanes-Oxley provision it believed was violated and that the law did not protect employees who simply “push back” from their supervisors.

Citigroup also said Martin had not made any allegations of fraud or intent to mislead shareholders.

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

Martin is seeking reinstatement, back pay and benefits, and compensation for image and emotional damage.

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