US Supreme Court rejects Citigroup's appeal in lawsuit against Mexican oil company fraud
The U.S. Supreme Court declined to hear Citigroup’s appeal on Monday, despite the fact that the lawsuit accused the?bank for orchestrating a massive fraud against the Mexican oil and gas company Oceanografia. This lawsuit claimed the?bank caused more than $1 billion in losses.
The Justices rejected Citigroup's appeal against a May 2025 lower court decision to revive a decade-old lawsuit brought by over 30 plaintiffs, including Oceanografia bondholders and shipping companies as well as Rabobank of the Netherlands. The Supreme Court, by doing this, allowed the lower court's ruling to stand.
Oceanografia had provided drilling services for the state-owned Petroleos Mexicoos before it was seized by Mexico in 2014. Oceanografia declared bankruptcy two years after it was seized by the Mexican government.
Plaintiffs alleged that Citigroup Banamex, the Banamex division of Citigroup based in New York, advanced $3.3 billion between 2008 and 2014. This was despite knowing Oceanografia had a?large amount of debt and that Pemex had forgeried signatures on authorization documents.
Citigroup uncovered fraudulent cash advances totaling $430 million later. In 2018, the U.S. Securities and Exchange Commission (SEC) fined Citigroup $4.75million over Banamex’s internal controls.
The 11th U.S. Circuit Court of Appeals, a three-judge panel, found that there were sufficient allegations to prove that Citigroup withheld key information about Oceanografia from the plaintiffs while benefiting from interest payments it collected on the advances. Circuit Court of Appeals determined that there were sufficient allegations to prove Citigroup had withheld important information about Oceanografia while collecting interest on advances.
The panel said that even if the allegations were true, it would be "difficult to believe" that an advanced bank like Citigroup wouldn't have been aware of what Oceanografia did.
Citigroup's Supreme Court appeal was limited to bondholder claims.
Citigroup said that bondholders shouldn't have been able to pursue their "garden variety" securities fraud civil cases under the Racketeer-Influenced and Corrupt Organisations Act (RICO), a federal antiracketeering statute which allows triple damages.
The bank said that the 11th Circuit?decision was in conflict with three other federal appellate courts.
Bondholders responded by saying that Congress didn't intend to preclude them from pursuing?RICO claims just because someone else such as the SEC might have brought securities fraud claims.
Bondholders said that it is possible that no private plaintiff can bring securities fraud cases because no one has been accused of trading in reliance on false statements. (Reporting and editing by Will Dunham; Jonathan Stempel)
(source: Reuters)
