Courtesy of Pam Martens.
Two days ago, a former Citigroup employee, Erin Daly, filed a 27-page lawsuit in Federal Court in Manhattan alleging gender discrimination and unlawful termination. On the same day, November 28, Daly simultaneously filed a complaint with the Department of Labor alleging she was retaliated against by Citigroup after she reported “violations of insider trading laws” to lawyers at the bank. It is illegal for U.S. banks to retaliate against whistleblowers.
According to the Federal lawsuit, less than two weeks after Daly reported the insider trading law violations to internal lawyers, she was terminated from the bank.
These are extremely serious charges against a mega Wall Street bank that would have gone belly up in 2008 had it not received $45 billion in equity infusions from the taxpayer, over $300 billion in asset guarantees from the government and more than $2.5 trillion in secret, cumulative loans from the Federal Reserve at below-market interest rates from 2007 to 2010.
These are also extremely serious charges because Citigroup became an admitted felon on May 20, 2015 over its role in the rigging of foreign currency trading. A behemoth Wall Street bank holding hundreds of billions of dollars in insured deposits backstopped by the taxpayer while simultaneously being a charged felon is not an admirable banking business model. Citigroup’s history of being serially charged with brazen violations of law by its regulators should have already resulted, in a rational world of finance, in its forced breakup a long time ago. (See highlights of charges below.)
The Federal Reserve, which oversees bank holding companies, has said it is looking at risk controls as well as the culture at the largest Wall Street banks. It should take a serious interest in the allegations being made by Daly. Her description in the Federal lawsuit of how hot Initial Public Offerings (IPOs) are handled at the bank as well as how insider information related to restricted Rule 144 stock is handled paints a portrait of a Wall Street institution running its operation by the seat of its pants rather than adhering to strict legal requirements.
This would certainly not be the first time that a conscientious whistleblower came forward at Citigroup only to be sent packing. The official report on the 2008 financial collapse, the worst since the Great Depression, singled out Citigroup and how it treated Richard Bowen, another Citigroup whistleblower. The Financial Crisis Inquiry Commission report notes the following:
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