CONTINGENCIES

9 Months Ended

Sep. 30, 2012

CONTINGENCIES

CONTINGENCIES

22.   CONTINGENCIES

        The following information supplements and amends, as applicable, the disclosures in Note 29 to the Consolidated Financial Statements of Citigroup's 2011 Annual Report on Form 10-K and Note 22 to the Consolidated Financial Statements of Citigroup's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012. For purposes of this Note, Citigroup and its affiliates and subsidiaries, as well as their current and former officers, directors and employees, are sometimes collectively referred to as Citigroup and Related Parties.

        In accordance with ASC 450 (formerly SFAS 5), Citigroup establishes accruals for litigation and regulatory matters when Citigroup believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of loss ultimately incurred in relation to matters for which an accrual has been established may be substantially higher or lower than the amounts accrued for those matters.

        If Citigroup has not accrued for a matter because the matter does not meet the criteria for accrual (as set forth above), or Citigroup believes an exposure to loss exists in excess of the amount accrued for a particular matter, in each case assuming a material loss is reasonably possible, Citigroup discloses the matter. In addition, for such matters, Citigroup discloses an estimate of the aggregate reasonably possible loss or range of loss in excess of the amounts accrued for those matters as to which an estimate can be made. At September 30, 2012, Citigroup's estimate was materially unchanged from its estimate of approximately $4 billion at December 31, 2011, as more fully described in Note 29 to the Consolidated Financial Statements in the 2011 Annual Report on Form 10-K.

        As available information changes, the matters for which Citigroup is able to estimate, and the estimates themselves, will change. In addition, while many estimates presented in financial statements and other financial disclosure involve significant judgment and may be subject to significant uncertainty, estimates of the range of reasonably possible loss arising from litigation and regulatory proceedings are subject to particular uncertainties. For example, at the time of making an estimate, Citigroup may have only preliminary, incomplete or inaccurate information about the facts underlying the claim; its assumptions about the future rulings of the court or other tribunal on significant issues, or the behavior and incentives of adverse parties or regulators, may prove to be wrong; and the outcomes it is attempting to predict are often not amenable to the use of statistical or other quantitative analytical tools. In addition, from time to time an outcome may occur that Citigroup had not accounted for in its estimates because it had deemed such an outcome to be remote. For all these reasons, the amount of loss in excess of accruals ultimately incurred for the matters as to which an estimate has been made could be substantially higher or lower than the range of loss included in the estimate.

        Subject to the foregoing, it is the opinion of Citigroup's management, based on current knowledge and after taking into account its current legal accruals, that the eventual outcome of all matters described in this Note would not be likely to have a material adverse effect on the consolidated financial condition of Citigroup. Nonetheless, given the substantial or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of such matters, an adverse outcome in certain of these matters could, from time to time, have a material adverse effect on Citigroup's consolidated results of operations or cash flows in particular quarterly or annual periods.

        For further information on ASC 450 and Citigroup's accounting and disclosure framework for litigation and regulatory matters, see Note 29 to the Consolidated Financial Statements of Citigroup's 2011 Annual Report on Form 10-K.

Credit Crisis-Related Litigation and Other Matters

        Citigroup continues to cooperate fully in response to subpoenas and requests for information from the Securities and Exchange Commission, the Department of Justice and subdivisions thereof, bank regulators, and other federal and state government agencies and authorities in connection with formal and informal (and, in many instances, industry-wide) inquiries concerning Citigroup's mortgage-related conduct and business activities, and other matters related to the credit crisis.

Mortgage-Related Litigation and Other Matters

        Securities Actions:    On August 29, 2012, the United States District Court for the Southern District of New York issued an order preliminarily approving the parties' settlement in IN RE CITIGROUP INC. SECURITIES LITIGATION, pursuant to which Citigroup has agreed to pay $590 million. A fairness hearing is scheduled for January 15, 2013. Additional information relating to this action is publicly available in court filings under the docket number 07 Civ. 9901 (S.D.N.Y.) (Stein, J.).

        On August 30, 2012, Rentokil-Initial Pension Scheme filed a putative class action complaint against Citigroup and Related Parties on behalf of purchasers of 26 Citigroup offerings of medium term Euro Notes issued between October 12, 2005 and February 25, 2009. The complaint asserts claims under Section 90 of the Financial Services and Markets Act 2000 and includes allegations similar to those asserted in IN RE CITIGROUP INC. BOND LITIGATION. Additional information relating to this action is publicly available in court filings under the docket number 12 Civ. 6653 (S.D.N.Y.) (Stein, J.).

        ERISA Matters:    On October 15, 2012, the United States Supreme Court denied plaintiffs-appellants' petition for a writ of certiorari seeking review of the United States Court of Appeals for the Second Circuit's decision affirming the district court's dismissal of plaintiffs' complaint in GRAY v. CITIGROUP INC. Additional information relating to this action is publicly available in court filings under the docket numbers 07 Civ. 9790 (S.D.N.Y.) (Stein, J.), 09-3804-cv (2d Cir.), and No. 11-1531 (S. Ct.).

        Beginning on October 28, 2011, several putative class actions were filed in the United States District Court for the Southern District of New York by current or former Citigroup employees asserting claims under ERISA against Citigroup and Related Parties alleged to have served as ERISA plan fiduciaries from 2008 to 2009. On July 27, 2012, these actions were consolidated under the caption IN RE CITIGROUP ERISA LITIGATION II, and on September 14, 2012, plaintiffs filed a consolidated complaint. Additional information relating to this action is publicly available in court filings under the docket number 11 Civ. 7672 (S.D.N.Y.) (Koeltl, J.).

        Mortgage-Backed Securities and CDO Investor Actions and Repurchase Claims:    On July 27, 2012, John Hancock Life Insurance Co. and several affiliated entities filed a complaint in the United States District Court for the District of Minnesota against various defendants, including Citigroup Global Markets Inc. (CGMI), asserting disclosure claims arising out of purchases of RMBS. Additional information relating to this action is publicly available in court filings under the docket number 12 Civ. 01841 (D. Minn.) (Montgomery, J.).

        On July 27, 2012, Royal Park Investments SA/NV filed a summons with notice in New York Supreme Court against various defendants, including Citigroup and Related Parties, asserting disclosure claims arising out of purchases of RMBS. Additional information relating to this action is publicly available in court filings under the docket number 652607/2012 (N.Y. Sup. Ct.).

        On August 10, 2012, the Federal Deposit Insurance Corporation filed complaints in the Alabama Circuit Court of Montgomery County and the United States District Courts for the Southern District of New York and the Central District of California against various defendants, including Citigroup and Related Parties, asserting disclosure claims arising out of RMBS purchases by a failed bank for which the FDIC is acting as receiver. Additional information relating to these actions is publicly available in court filings under the docket numbers 12 Civ. 6911 (C.D. Cal.) (Pfaelzer, J.), 12 Civ. 6166 (S.D.N.Y.) (Stanton, J.), 12 Civ. 0790 (M.D. Al.) (Watkins, C.J.), 12 Civ. 0784 (M.D. Al.) (Watkins, C.J.), 12 Civ. 0791 (M.D. Al.) (Watkins, C.J.), and MDL No. 2265 (C.D. Cal.).

        On August 14, 2012, a motions panel of the United States Court of Appeals for the Second Circuit granted defendants' motion for leave to appeal from the district court's denial of defendants' motion to dismiss in FEDERAL HOUSING FINANCE AGENCY v. UBS AMERICAS, INC., ET AL., a parallel case to FEDERAL HOUSING FINANCE AGENCY v. ALLY FINANCIAL INC., ET AL., FEDERAL HOUSING FINANCE AGENCY v. CITIGROUP INC., ET AL., and FEDERAL HOUSING FINANCE AGENCY v. JPMORGAN CHASE & CO., ET AL. Additional information relating to these actions is publicly available in court filings under the docket numbers 11 Civ. 5201, 6188, 6196 and 7010 (S.D.N.Y.) (Cote, J.) and 12-2547-cv (2d Cir.).

        On September 5, 2012, IKB International S.A. and IKB Deutsche Industriebank AG filed a summons with notice in New York Supreme Court against Citigroup and Related Parties. Additional information relating to this action is publicly available in court filings under the docket number 653100/2012 (N.Y. Sup. Ct.).

        On September 19, 2012, the Illinois state court denied defendants' motions to dismiss in FEDERAL HOME LOAN BANK OF CHICAGO v. BANC OF AMERICA FUNDING CORP., ET AL. Additional information relating to this action is publicly available in court filings under docket number 10-CH-45033 (Ill. Cir. Ct.) (Pantle, J.).

        On September 28, 2012, the Massachusetts state court denied in part and granted in part defendants' motion to dismiss in CAMBRIDGE PLACE INVESTMENT MANAGEMENT, INC. v. MORGAN STANLEY & CO., INC., ET AL. Additional information relating to this action is publicly available in court filings under the docket numbers 10-2741-BLS1 (Mass. Super. Ct.) (Billings, J.) and 11-0555-BLS1 (Mass. Super. Ct.) (Billings, J.).

        On October 15, 2012, the United States District Court for the Southern District of New York granted lead plaintiffs' amended motion for class certification in NEW JERSEY CARPENTERS HEALTH FUND V. RESIDENTIAL CAPITAL LLC, ET AL., having previously denied lead plaintiffs' motion for class certification on January 18, 2011. Plaintiffs in this action allege violations of Sections 11, 12, and 15 of the Securities Act of 1933 and assert disclosure claims on behalf of a putative class of purchasers of mortgage-backed securities issued by Residential Accredited Loans, Inc. pursuant or traceable to prospectus materials filed on March 3, 2006 and April 3, 2007. CGMI is one of the underwriter defendants. Additional information relating to this action is publicly available in court filings under the docket number 08 CV 8781 (S.D.N.Y.) (Baer, J.).

Interbank Offered Rates-Related Litigation and Other Matters

        In connection with the investigations and inquiries regarding submissions made by panel banks to bodies that publish various interbank offered rates, certain Citigroup subsidiaries have received additional requests for information and documents from various domestic and overseas regulators and enforcement agencies, including the Monetary Authority of Singapore and a consortium of state Attorneys General. Citigroup continues to cooperate with the inquiries and investigations and respond to the requests.

        Citigroup and Citibank, N.A., along with other U.S. Dollar (USD) LIBOR panel banks, are defendants in the multidistrict litigation (MDL) proceeding before Judge Buchwald in the United States District Court for the Southern District of New York captioned IN RE LIBOR-BASED FINANCIAL INSTRUMENTS ANTITRUST LITIGATION, appearing under docket number 1:11-md-2262 (S.D.N.Y.). Judge Buchwald has appointed interim lead class counsel for, and consolidated amended complaints have been filed on behalf of, three separate putative classes of plaintiffs: (1) over-the-counter (OTC) purchasers of derivative instruments tied to USD LIBOR; (2) purchasers of exchange-traded derivative instruments tied to USD LIBOR; and (3) indirect OTC purchasers of U.S. debt securities. Each of these putative classes alleges that the panel bank defendants conspired to suppress USD LIBOR in violation of the Sherman Act and/or the Commodity Exchange Act, thereby causing plaintiffs to suffer losses on the instruments they purchased. Also consolidated into the MDL proceeding are individual civil actions commenced by various Charles Schwab entities that allege that the panel bank defendants conspired to suppress the USD LIBOR rates in violation of the Sherman Act, the Racketeer Influenced and Corrupt Organizations Act (RICO), and California state law, causing the Schwab entities to suffer losses on USD LIBOR-linked financial instruments that they owned. Plaintiffs in these actions seek compensatory damages and restitution for losses caused by the alleged violations, as well as treble damages under the Sherman Act. The Schwab and OTC plaintiffs also seek injunctive relief.

        Citigroup and Citibank, N.A., along with other defendants, have moved to dismiss all of the above actions that were consolidated into the MDL proceeding as of June 29, 2012. Briefing on the motion to dismiss was completed on September 27, 2012. Judge Buchwald has stayed all subsequently filed actions that fall within the scope of the MDL until she resolves the motion to dismiss. Citigroup and/or Citibank, N.A. are named in five such stayed actions.

        The stayed actions include two similar lawsuits filed on behalf of putative classes of community and other banks, savings and loans institutions and credit unions that allegedly suffered losses on loans they made at interest rates tied to USD LIBOR and a further lawsuit filed on behalf of a putative class of persons and entities who purchased derivative instruments tied to USD LIBOR from certain third party commercial banks and insurance companies. Additional information relating to these actions is publicly available in court filings under docket numbers 1:12-cv-4205 (S.D.N.Y.) (Buchwald, J.), 1:12-cv—5723 (S.D.N.Y.) (Buchwald, J.) and 1:12-cv-5822 (S.D.N.Y.) (Buchwald, J.).

        In addition, on August 8, 2012, a new putative class action captioned LIEBERMAN ET AL. V. CREDIT SUISSE GROUP AG was filed in the Southern District of New York against various USD LIBOR panel banks, including Citibank, on behalf of purchasers who owned a preferred equity security on which dividends were payable at a rate linked to USD LIBOR. Plaintiffs in this action assert unjust enrichment and antitrust claims under the laws of various states, alleging that the panel banks colluded to artificially suppress USD LIBOR, thereby lowering the dividends plaintiffs received on their securities. On October 4, 2012, another new putative class action captioned ADAMS ET AL. V. BANK OF AMERICA CORP. was filed in the Southern District of New York against various USD LIBOR panel banks and their affiliates, including Citigroup and Citibank, N.A., on behalf of a putative class of individual adjustable rate mortgage borrowers. Plaintiffs allege that the panel banks manipulated USD LIBOR to raise rates on certain dates in order to increase plaintiffs' payment obligations, in violation of federal and New York state antitrust law. The plaintiffs in these actions seek compensatory damages, treble damages, and injunctive relief. Judge Buchwald has consolidated these cases into the MDL proceeding. Additional information relating to these actions is publicly available in court filings under docket numbers 1:12-cv-6056 (S.D.N.Y.) (Buchwald, J.) and 1:12-cv-7461 (S.D.N.Y.) (Buchwald, J).

        In addition, on April 30, 2012, an action was filed in the same court on behalf of a putative class of persons and entities who transacted in exchange-traded Euroyen futures and option contracts between June 2006 and September 2010. This action, captioned LAYDON V. MIZUHO BANK LTD. ET AL., is not part of the MDL. The complaint names as defendants banks that are or were members of the panels making submissions used in the calculation of Japanese Yen LIBOR and the Tokyo Inter-Bank Offered Rate (TIBOR), and certain affiliates of some of those banks, including Citibank, N.A. and Citibank, Japan Ltd. The complaint alleges that the plaintiffs were injured as a result of purported manipulation of those reference interest rates, and asserts claims arising under the Commodity Exchange Act, the Sherman Act, and state consumer protection statutes. Plaintiffs seek compensatory damages, treble damages under the Sherman Act, and injunctive relief. Judge Daniels has issued an order directing the plaintiffs to file an amended complaint by November 30, 2012. Additional information relating to this action is publicly available in court filings under the docket number 12-cv-3419 (S.D.N.Y.) (Daniels, J.).

KIKOs

        As of September 30, 2012, 85 civil lawsuits had been filed in district courts by small and medium-size export businesses against a Citigroup subsidiary (CKI). To date, 82 cases have been decided at the district court level, and CKI has prevailed in 64 of those decisions. In the other 18 decisions, plaintiffs were awarded only a portion of the damages sought. The damage awards total in the aggregate approximately $28.8 million.

        Of the 82 cases decided at the district court level, 60 have been appealed to the high court, including the 18 in which an adverse decision was rendered against CKI in the district court. Of the eight appeals decided at high court level, CKI prevailed in four cases, and in the other four plaintiffs were awarded partial damages, which increased the aggregate damages awarded against CKI by a further $8.5 million. CKI is appealing the four adverse decisions to the Supreme Court.

Tribune Company Bankruptcy

        On July 23, 2012, the United States Bankruptcy Court for the District of Delaware confirmed the fourth amended plan of reorganization. Certain parties are appealing that decision. Additional information relating to this action is publicly available in court filings under the docket numbers 08-13141 (Bankr. D. Del.) (Carey, J.) and 12 Civ. 01072, 01073, 00128, 01106 and 01100 (D. Del.) (Sleet, C.J.).

Interchange Litigation

        On October 19, 2012, the class plaintiffs in the putative class actions filed the parties' settlement agreement with the court as part of a motion for preliminary approval of the settlement. A preliminary approval hearing has been scheduled for November 9, 2012. Visa and MasterCard also entered into a settlement agreement with the merchants that filed individual, non-class actions. While Citigroup and Related Parties are not parties to the individual merchant non-class settlement agreement, they are contributing to that settlement, and the agreement provides for a release of claims against Citigroup and Related Parties.

Settlement Payments

        Payments required in settlement agreements described above have been made or are covered by existing litigation accruals.

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        Additional matters asserting claims similar to those described above may be filed in the future.