Citigroup (C)

Item 1. Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Enron Corp.

        On April 4, 2008, Citigroup announced an agreement to settle actions filed by Enron in its Chapter 11 bankruptcy proceedings seeking to recover payments to Citigroup as alleged preferences or fraudulent conveyances, to disallow or equitably subordinate claims of Citigroup and Citigroup transferees on the basis of alleged fraud, and to recover damages from Citigroup for allegedly aiding and abetting breaches of fiduciary duty. Under the terms of the settlement (which was approved by the Bankruptcy Court for the Southern District of New York on April 24, 2008), Citigroup will make a pretax payment of $1.66 billion to Enron, and will waive certain claims against Enron's estate. Enron also will allow specified Citigroup-related claims in the bankruptcy proceeding, including all of the bankruptcy claims of parties holding approximately $2.4 billion of Enron credit-linked notes ("CLNs"), and will release all claims against Citigroup. Citigroup separately agreed to settle an action brought by certain trusts that issued the CLNs in question, by the related indenture trustee and by certain holders of those securities. The amounts of both settlements are fully covered by Citigroup's existing litigation reserves.

        On February 14, 2008, Citigroup agreed to settle Connecticut Resources Recovery Authority v. Lay, et al., an action brought by the Attorney General of Connecticut in connection with an Enron-related transaction; subsequently, the District Court dismissed the case on March 5, 2008. The amount paid to settle this action was covered by existing Citigroup litigation reserves.

Parmalat

        In In re Parmalat Securities Litigation, the Company filed a motion for summary judgment on February 29, 2008. The motion is pending.

        In Bondi v. Citigroup, pending in New Jersey Superior Court, the Company filed a motion for summary judgment with respect to each of plaintiff's claims and with respect to Citibank's counterclaims. Plaintiff also filed a motion for summary judgment with respect to Citibank's counterclaims. On April 15, 2008 the Court granted the Company's motion for summary judgment on all claims, except the claim relating to allegations of aiding and abetting Parmalat insiders in breaching their fiduciary duties to Parmalat, insofar as that claim pertains to the insiders' larceny from Parmalat. The Court also denied Bondi's motion for summary judgment on Citibank's counterclaim. Trial is set for May 5, 2008 on the remaining claim and Citibank's counterclaims.

        In the criminal investigation into alleged bankruptcy offenses relating to the collapse of Parmalat pending in Parma, Italy, a preliminary hearing began on April 21, 2008 with respect to 10 current and former Company employees. The next hearing is scheduled for May 28, 2008, when it is expected that two additional former Company employees will be added to the proceedings.

Subprime Mortgage-Related Litigation

        Derivative Actions.    On February 5, 2008, the four derivative actions filed in Delaware Chancery Court were consolidated under the caption In re Citigroup Inc. Shareholder Derivative Litigation. A consolidated amended derivative complaint was filed on February 19, 2008.

        Other Matters.    Putative class actions brought by shareholders of American Home Mortgage Investment Corp., pending in the Eastern District of New York, were consolidated on March 21, 2008. On April 4, 2008, lead plaintiff in the multi-district litigation filed a new putative class action complaint alleging violations of the securities laws arising out of underwriting activity by the Company and other investment banks, on behalf of American Home Mortgage. A consolidated amended complaint is scheduled to be filed by May 20, 2008.

        Two of three putative class actions brought by shareholders of Countrywide Financial Corp. were consolidated under the caption In re Countrywide Financial Corp. Securities Litigation. The third, Luther v. Countrywide Financial Corp., et al., was remanded to California state court on February 28, 2008.

        On February 22, 2008, Citibank, N.A. filed a complaint against the City of Cleveland, Ohio seeking declaratory and injunctive relief on the ground that the City of Cleveland's public nuisance claim, asserted in a separate action, is preempted by federal law and may not be asserted against national banks and their operating subsidiaries.

        On April 14, 2008, a putative class action was filed against the Company in the Southern District of Florida, alleging that the Company violated the federal securities laws and Florida state law in connection with its marketing of the Falcon Strategies Two B hedge fund.

Interchange Fees

        Citigroup Inc. and certain of its subsidiaries are defendants, together with Visa, MasterCard, and various other banks, in actions filed on behalf of a putative class of retail merchants that accept Visa and MasterCard payment cards. The first of these actions was filed in June 2005, and the lawsuits were subsequently consolidated for pretrial proceedings, together with related lawsuits brought by individual plaintiffs against Visa and MasterCard, in the United States District Court for

119

the Eastern District of New York under the caption In re Payment Card Interchange Fee and Merchant Discount Litigation. On April 24, 2006, putative class plaintiffs filed a First Consolidated and Amended Class Action Complaint ("Consolidated Complaint"). The Consolidated Complaint alleges, among other things, that Defendants have engaged in conspiracies to set the price of interchange and merchant discount fees on credit and off-line debit card transactions, in violation of Section 1 of the Sherman Act and a California statute. The complaint also alleges additional federal antitrust violations by Defendants of Section 1 and Section 2 of the Sherman Act, including alleged unlawful contracts in restraint of trade pertaining to various rules governing merchant conduct maintained by Visa or MasterCard, alleged unlawful tying and bundling arrangements, alleged unlawful exclusive dealing arrangements, and alleged unlawful maintenance of monopoly power by Visa. The District Court granted Defendants' motion to dismiss all claims for damages that pre-date January 1, 2004. On May 22, 2006, the putative class plaintiffs filed a supplemental complaint against MasterCard and certain other bank defendants, including Citigroup Inc. and certain of its subsidiaries, alleging that MasterCard's initial public offering in 2006 violated Section 7 of the Clayton Act and Section 1 of the Sherman Act. The supplemental complaint also alleged that the MasterCard initial public offering was a fraudulent conveyance under New York state law. The defendants to the supplemental complaint filed a motion to dismiss its claims; the magistrate has issued a report recommending denying the motion in part, and granting it in part with leave to amend, which is pending before the Court for decision. Discovery is ongoing, and plaintiffs are anticipated to file a motion seeking class certification on May 8, 2008.

Other Matters

        Three putative class actions and one individual action have been filed against the Company and related entities and individuals in the Southern District of New York, asserting various claims under the federal securities laws and state common law arising out of plaintiffs' investments in auction rate securities. The Company, along with other industry participants, also has received a subpoena from a state governmental agency relating to auction rate securities. The Company is cooperating fully with that inquiry.

        A purported class action complaint, Leber v. Citigroup Inc., et al., was filed against the Company and its administration and investment committees, alleging that defendants engaged in prohibited transactions and breached their fiduciary duties of loyalty and prudence by authorizing or causing the Citigroup 401(k) Plan to invest in Citigroup-affiliated mutual funds and to purchase services from Citigroup-affiliated entities. The complaint was brought on behalf of all participants in the Citigroup 401(k) Plan from 2001 through the present.

120

Item 1. Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as updated by our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007.

Enron Corp.

        On August 27, 2007, the District Court for the Southern District of New York in IN RE ENRON CORP. reversed the rulings of the federal bankruptcy court that certain bankruptcy claims held by Citigroup transferees could be equitably subordinated or disallowed solely because of the alleged misconduct of Citigroup, and remanded for further proceedings.

Parmalat

        On August 8, 2007, the Parma prosecutors completed their preliminary investigation and accused 13 Citigroup employees of criminal bankruptcy offenses under Italian law, arising out of the collapse of Parmalat.

        On October 2, 2007, the New Jersey trial court in BONDI v. CITIGROUP denied Citigroup's renewed motion to dismiss the complaint for forum non conveniens and set a trial date of May 5, 2008.

IPO Securities Litigation

        On August 14, 2007, plaintiffs filed amended complaints in the six focus cases as well as amended master allegations for all cases in the coordinated proceedings. On September 27, 2007, plaintiffs filed a motion to certify new classes in the six focus cases.

The following information supplements and amends our discussion set forth under Part I, Item 3 “Legal Proceedings” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as updated by our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.

Enron Corp.

On June 6, 2007, the parties reached an agreement in principle to settle  BAYERISCHE LANDESBANK, ET AL. v. JPMORGAN CHASE BANK, ET AL.

Research

Customer Class Actions.

On May 3, 2007, the District Court remanded DISHER V. CITIGROUP GLOBAL MARKETS, INC., to Illinois state court.  On June 13, 2007, Citigroup moved in state court to dismiss the action.

Parmalat

On May 16, 2007, the New Jersey Supreme Court denied Citigroup’s motion for leave to appeal the denial of its renewed motion to dismiss for forum non conveniens.  On July 3, 2007, Parmalat moved for leave to amend its complaint.

In July 2007, the Milan prosecutor obtained indictments against numerous individuals, including a Citigroup employee, for alleged offenses under Italian law that arise out of the collapse of Parmalat.

On July 24, 2007, the United States District Court for the Southern District of New York granted Citigroup’s and other defendants’ motion for judgment on the pleadings and dismissed the claims of all foreign purchasers of Parmalat securities for lack of subject matter jurisdiction.

Mutual Funds

In May 2007, CGMI finalized its settlement agreement with the NYSE and the New Jersey Bureau of Securities on the matter related to its market-timing practices prior to September 2003.

IPO Securities Litigation

On May 18, 2007, the Second Circuit denied plaintiffs’ petition for rehearing en banc of the Second Circuit’s decision reversing the district court’s class certification.

IPO Antitrust Litigation

On June 18, 2007, the United States Supreme Court ruled that the securities law precludes application of the antitrust laws to the claims asserted by plaintiffs, effectively terminating the litigation.

Other

On May 22, 2007, the New York Supreme Court denied approval of the proposed settlement in CARROLL v. WEILL, ET AL.  On July 20, 2007, plaintiff moved to dismiss the lawsuit without prejudice.

Item 1. Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

Enron Corp.

        Following the decision of the Court of Appeals for the Fifth Circuit on March 19, 2007, reversing the District Court's certification of a class in NEWBY, et al. v. ENRON CORP., et al., the District Court, on March 20, 2007, stayed all actions coordinated or consolidated with NEWBY in which plaintiffs asserted claims under Section 10(b) of the Securities Exchange Act of 1934 against financial institutions.

Research

Telecommunications Research Class Actions.

        On March 23, 2007, the District Court approved Citigroup's settlement of a putative class action, LOS ANGELES CITY EMPLOYEES RETIREMENT ASSOCIATION v. CITIGROUP, which asserted claims under the Securities Exchange Act of 1934 concerning Salomon Smith Barney's equity research coverage of Focal Communications.

Customer Class Actions.

        In DISHER V. CITIGROUP GLOBAL MARKETS INC., on March 2, 2007, the District Court vacated its 2005 order dismissing the case and remanded the action to Illinois state court.

Parmalat

        On March 9, 2007, the New Jersey Superior Court, Appellate Division, denied Citigroup's motion for leave to appeal the denial of its renewed motion to dismiss the complaint in BONDI V. CITIGROUP on the ground of forum non conveniens. On March 26, 2007, Citigroup filed a motion for leave to appeal with the New Jersey Supreme Court; that motion is pending.

IPO Securities Litigation

        On April 6, 2007, the Second Circuit panel that reversed the district court's class certification decision denied plaintiffs' petition for rehearing. The companion petition for rehearing en banc remains pending before the Second Circuit.

Other

        In IN RE: CITIGROUP PENSION PLAN ERISA LITIGATION, on April 4, 2007, the District Court denied defendants' motion for entry of a partial final judgment, for permission to file an interlocutory appeal from the summary judgment order, and for a stay of proceedings.

        In CARROLL v. WEILL, ET AL., the New York Supreme Court held fairness hearings on the proposed settlement on February 28 and March 1, 2007.

Item 1. Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as updated by our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006.

Enron Corp.

        In light of the settlement of the securities class action (NEWBY, ET AL. V. ENRON CORP., ET AL.), the plaintiffs have agreed to dismiss the following lawsuits against Citigroup: CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM V. BANC OF AMERICA SECURITIES LLC, ET AL.; HEADWATERS CAPITAL LLC V. LAY ET AL.; and VARIABLE ANNUITY LIFE INS. CO. V. CREDIT SUISSE FIRST BOSTON CORP., ET AL. Plaintiffs in two other cases, which are not part of the NEWBY class, have also voluntarily dismissed their claims against Citigroup: STEINER V. ENRON CORP., ET AL. and TOWN OF NEW HARTFORD V. LAY, ET AL.

WorldCom, Inc.

        On September 11, 2006, Citigroup settled HOLTSBERG V. CITIGROUP, ET AL. and 25 related cases pending in Palm Beach Circuit Court brought by individuals who opted out of the WorldCom securities class action settlement. The settlement was covered by existing reserves.

        On October 13, 2006, the United States District Court for the Southern District of New York dismissed with prejudice the claims in HOLMES, ET AL. V. GRUBMAN, ET AL., an action brought by an individual and entities who opted out of the WorldCom securities class action settlement.

Research

        On August 17, 2006, the United States District Court for the Southern District of New York approved Citigroup's class action settlement of IN RE SALOMON ANALYST AT&T LITIGATION, and on September 29, 2006 that same court approved Citigroup's class action settlements in IN RE SALOMON ANALYST LEVEL 3 LITIGATION, IN RE SALOMON ANALYST XO LITIGATION, and IN RE SALOMON ANALYST WILLIAMS LITIGATION.

        On September 14, 2006, Citigroup settled all claims asserted against the company by claimants in STURM, ET AL. v. CITIGROUP, ET AL. The settlement was covered by existing reserves.

        On October 6, 2006, the United States Court of Appeals granted interlocutory review of the district court's decision certifying a plaintiff class in IN RE SALOMON ANALYST METROMEDIA LITIGATION.

Parmalat

        In BONDI v. CITIGROUP, on September 19, 2006, the New Jersey Supreme Court denied defendants' motion for leave to appeal from the Appellate Division's affirmance of the trial court's denial of defendants' motion to dismiss.

Adelphia Communications Corporation

        Defendant banks in IN RE ADELPHIA COMMUNICATIONS CORPORATION SECURITIES AND DERIVATIVE LITIGATION, including the Citigroup Parties, have entered into settlement agreements with the Los Angeles County Employees Retirement Association and with The Division of Investment of the New Jersey Department of Treasury. The Citigroup Parties' share of the settlement was covered by existing reserves.

Other

        In CARROLL v. WEILL, ET AL., in September 2006, the New York Supreme Court scheduled a fairness hearing on the proposed settlement for December 14, 2006.

Item 1.    Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as updated by our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.

Enron Corp.

        On May 24, 2006, the District Court gave final approval to Citigroup's settlement of the securities class action (NEWBY, ET AL. V. ENRON CORP., ET AL.).

Research

        On May 12, 2006, the District Court preliminarily approved the class action settlements in IN RE SALOMON ANALYST LEVEL 3 LITIGATION, IN RE SALOMON ANALYST XO LITIGATION, and IN RE SALOMON ANALYST WILLIAMS LITIGATION.

        On May 18, 2006, the District Court gave final approval to the settlement in NORMAN v. SALOMON SMITH BARNEY.

        On June 20, 2006, the District Court certified the plaintiff class in IN RE SALOMON ANALYST METROMEDIA LITIGATION.

        On June 26, 2006, the United States Supreme Court granted plaintiffs' petition for a writ of certiorari, vacated the opinion of the United States Court of Appeals for the Seventh Circuit in DISHER v. CITIGROUP GLOBAL MARKETS INC., and then remanded the case to the Seventh Circuit for further proceedings in light of the Supreme Court's decision in Kircher v. Putnam Funds Trust.

Parmalat

        On July 14, 2006, the New Jersey Appellate Division affirmed the denial of Defendants' motions to dismiss in BONDI v. CITIGROUP INC., ET AL. Defendants moved for leave to appeal to the New Jersey Supreme Court, and have sought a stay of proceedings at the trial court.

Adelphia Communications Corporation

        Without admitting any liability, CGMI and numerous other financial institution defendants have agreed to settle IN RE ADELPHIA COMMUNICATIONS CORPORATION SECURITIES AND DERIVATIVE LITIGATION for a total of $250 million, subject to final court approval. On June 15, 2006, the court granted its preliminary approval of the settlement and set November 10, 2006 for a final hearing. CGMI's share of the settlement is covered by existing reserves.

Foreign Currency Conversion

        Without admitting any liability, all defendants, including Citigroup defendants, have agreed to settle IN RE CURRENCY CONVERSION FEE ANTITRUST LITIGATION for a total of $336 million, subject to court approval. The Citigroup defendants' share of the settlement, which has been paid into an escrow account, was covered by existing reserves.

California Employment Actions

        Without admitting any liability, CGMI has reached an agreement in principle to a nationwide settlement for up to approximately $100 million of various class actions asserting violations of state and federal laws relating to overtime and violations of various state laws relating to alleged unlawful payroll deductions. The settlement, which is subject to court approval, is covered by existing reserves.

Item 1.    Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

WorldCom, Inc.

        In March 2006, the class action settlement in IN RE WORLDCOM, INC. SECURITIES LITIGATION became final, and the settlement amount was paid pursuant to the terms of the settlement agreement.

Research

        On March 29, 2006, the court preliminarily approved Citigroup's settlement of IN RE SALOMON ANALYST AT&T LITIGATION. A final hearing on the settlement is scheduled for August 11, 2006.

IPO Antitrust Litigation

        The underwriter defendants' motion in the Second Circuit to stay the issuance of the mandate remanding the cases to the district court pending the filing of a petition for writ of certiorari to the United States Supreme Court was granted on March 9, 2006, after the writ of certiorari was filed on March 8, 2006.

Other

        In DAVID B. SHAEV PROFIT SHARING ACCOUNT v. ARMSTRONG, ET AL., plaintiff has appealed the decision of the Chancery Court granting defendants' motion to dismiss the complaint.

        On March 17, 2006, Citigroup entered into a written settlement agreement in IN RE: CITIGROUP ERISA LITIGATION, which was preliminarily approved by the Court on April 17, 2006. A hearing on final approval is scheduled for August 4, 2006.

        On March 16, 2006, settlement papers in connection with the resolution of CARROLL v. WEILL, ET AL. were executed and subsequently filed with the court, following a February 16, 2006 agreement in principle. The settlement is subject to court approval.

Item 1. Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (filed with the Securities and Exchange Commission on February 28, 2005), as updated by our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed since February 28, 2005.

Enron Corp.

        On August 4, 2005, a breach of contract action was filed in the United States District Court for the Southern District of New York, WESTPAC BANKING CORPORATION v. CITIBANK, N.A. The complaint alleges that Citibank breached a representation and warranty in a Credit Default Swap agreement entered into in December 2000 concerning Enron.

        On August 26, 2005, a group of 15 plaintiffs filed an action in the United States District Court for the Southern District of Texas, AVENUE CAPITAL MANAGEMENT II, L.P., ET AL. v. J.P. MORGAN-CHASE & CO., ET AL. The complaint names as defendants Citigroup Inc., Citibank, N.A., Citigroup Global Markets Inc., and several J.P. Morgan entities and alleges fraud, breach of fiduciary duty and breach of contract arising out of Enron bank debt incurred under two syndicated revolving credit facilities and a syndicated letter of credit facility.

WorldCom, Inc.

        In STURM, ET AL. v. CITIGROUP, ET AL., an NASD arbitration seeking very significant compensatory and punitive damages, Claimants' common law claims, including fraud, arising out of alleged research analyst conflicts of interest related to SSB research coverage of WorldCom, were heard this quarter.

        Citigroup, along with other financial institution defendants, entered into a settlement in NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM v. EBBERS, ET AL., resolving all claims against the Citigroup-related defendants in this WorldCom-related action, which was brought by a plaintiff that opted out of the settlement of the WorldCom class action. The settlement amount is covered by existing litigation reserves.

        Citigroup along with other financial institutions and other defendants, entered into a settlement resolving all claims against the Citigroup-related defendants in 32 individual actions filed by a single law firm on behalf of 70 institutional plaintiffs that have opted out of the WorldCom class action settlement. Plaintiffs in these actions asserted various claims under federal and state law, including, among other things, federal and state securities claims, fraud, negligent misrepresentation and breach of fiduciary duty, in connection with the Citigroup-related defendants' research coverage, and underwriting of, WorldCom securities. The settlement amount is covered by existing litigation reserves.

Global Crossing

        On September 12, 2005, Citigroup entered into a settlement with the Global Crossing Estate Representative, resolving all claims pending in United States Bankruptcy Court for the Southern District of New York against the Citigroup-related defendants. The settlement amount is covered by existing litigation reserves.

Research

        On September 27, 2005, Citigroup entered into a memorandum of agreement settling all claims against the Citigroup-related defendants in IN RE SALOMON ANALYST AT&T LITIGATION, a putative class action alleging research analyst conflicts of interest. The settlement amount is covered by existing litigation reserves. The settlement is subject to judicial approval.

        On September 22, 2005, Citigroup reached an agreement-in-principle to settle all claims against the Citigroup-related defendants in NORMAN v. SALOMON SMITH BARNEY, ET AL., a putative class action asserting violations of the Investment Advisers Act of 1940 and various common law claims in connection with certain investors who maintained guided portfolio management accounts at Smith Barney. The settlement amount is covered by existing litigation reserves. The settlement is subject to judicial approval.

        On August 17, 2005, in DISHER v. CITIGROUP GLOBAL MARKETS INC., the United States Court of Appeals for the Seventh Circuit reversed the district court's grant of plaintiffs' motion to remand the case to state court, and directed the district court to dismiss the case as preempted under the Securities Litigation Uniform Standards Act ("SLUSA"). The United States Supreme Court has granted review in another case involving SLUSA that may affect the Seventh Circuit's dismissal of the Disher matter.

104

Parmalat

        In IN RE PARMALAT SECURITIES LITIGATION, plaintiff filed a second amended consolidated complaint on August 22, 2005. Defendants answered and discovery is ongoing.

Adelphia

        In May and July of 2005, the United States District Court for the Southern District of New York granted motions to dismiss several claims, based on the running of applicable statute of limitations, asserted in the putative class and individual actions being coordinated under IN RE ADELPHIA COMMUNICATIONS CORPORATION SECURITIES AND DERIVATIVE LITIGATION. With the exception of one individual action that was dismissed with prejudice, the court granted the putative class and individual plaintiffs leave to re-plead certain of those claims the court found to be time-barred. Additional motions to dismiss the class complaint and the remaining individual complaints on other grounds remain pending.

Transfer Agency

        Beginning in August 2005, five putative class action lawsuits alleging violations of federal securities laws and state law have been filed in the United States District Court for the Southern District of New York against Citigroup Global Markets Inc. and Smith Barney Fund Management LLC ("SBFM") based on the previously announced settlement resolving an SEC investigation into matters relating to arrangements among certain Smith Barney mutual funds, an affiliated transfer agent, and an unaffiliated sub-transfer agent. The complaints seek injunctive relief and compensatory and punitive damages, removal of SBFM as the advisor for the Smith Barney family of funds, rescission of the funds' management and other contracts with SBFM, recovery of all fees paid to SBFM pursuant to such contracts, and an award of attorneys' fees and litigation expenses.

IPO Securities Litigation

        On June 30, 2005, the United States Court of Appeals for the Second Circuit entered an order in IN RE INITIAL PUBLIC OFFERING SECURITIES LITIGATION agreeing to review the district court's order granting plaintiffs' motion for class certification.

IPO Antitrust Litigation

        On September 28, 2005, the United States Court of Appeals for the Second Circuit in IN RE INITIAL PUBLIC OFFERING ANTITRUST LITIGATION vacated the district court's order dismissing these actions and remanded for further proceedings.

California Employment Actions

        Numerous financial services firms, including Citigroup and its affiliates, have been named in purported class actions alleging that certain present and former employees in California were entitled to overtime pay under California and federal law and were subject to certain allegedly unlawful deductions in violation of California law. A mediation was held this quarter in one of these class actions seeking damages and injunctive relief, BAHRAMIPOUR v. CITIGROUP GLOBAL MARKETS INC., filed in the United States District Court for the Northern District of California.

Other

        On September 15, 2005, in FINK v. WEILL, a derivative action asserting breach of fiduciary duty and other state and federal claims, the United States District Court for the Southern District of New York denied plaintiffs' motion for leave to amend the complaint and granted defendants' motion to dismiss the complaint in its entirety.

105

Item 1.    Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

Enron Corp.

        In April 2005, Citigroup, along with other financial institution defendants, reached an agreement-in-principle to settle four state-court actions brought by various investment funds, which were not previously consolidated or coordinated with the NEWBY action. The four cases are OCM OPPORTUNITIES FUND III, L.P., et al. v. CITIGROUP INC., et al.; PACIFIC INVESTMENT MANAGEMENT CO. LLC, et al. v. CITIGROUP INC., et al.; AUSA LIFE INSURANCE v. CITIGROUP INC., et al. and PRINCIPAL GLOBAL INVESTORS v. CITIGROUP INC., et al. The amounts to be paid in settlement of these actions are covered by existing litigation reserves.

Dynegy Inc.

        The court had previously denied lead plaintiff's motion for leave to amend; no appeal was yet timely while the remainder of the case remained pending. On April 15, 2005, as part of a global settlement involving all defendants, Citigroup entered into a memorandum of understanding to settle this case. The amount to be paid in settlement is covered by existing litigation reserves.

WorldCom, Inc.

        The District Court approved the settlement of the IN RE TARGETS SECURITIES LITIGATION on April 22, 2005.

Global Crossing

        The plaintiffs and the Citigroup Related Defendants have entered into a definitive settlement agreement in the IN RE GLOBAL CROSSING, LTD SECURITIES LITIGATION; the settlement was preliminarily approved by the Court on March 8, 2005. The amount to be paid in settlement is covered by existing litigation reserves.

Research

        Two putative class actions against CGMI asserting common law claims on behalf of CGMI customers in connection with published investment research have been dismissed by United States District Courts, the dismissals of which were affirmed by the United States Court of Appeals for the Third and Ninth Circuits, respectively. Plaintiffs in the Ninth Circuit case have sought review by the United States Supreme Court; their petition for a writ of certiorari, which CGMI opposed, is pending before that court.

Parmalat

        On February 28, 2005, the Court granted in part and denied in part defendants' motion to dismiss the New Jersey action. Defendants filed an answer and counterclaims on March 17, 2005, alleging causes of action for fraud, negligent misrepresentation, conversion and breach of warranty. On April 21, 2005, plaintiff/counterclaim defendant filed a motion to dismiss the counterclaims. That motion remains pending.

Foreign Currency Conversion

        On March 9, 2005, the United States District Court for the Southern District of New York granted in part and denied in part defendants' motions for reconsideration of certain aspects of the October 15, 2004 rulings. Among other things, the Court narrowed the antitrust classes to certain VISA-branded or MasterCard-branded cardholders of Citibank (South Dakota) and J.P. Morgan Chase & Co., and declined to certify a Diners Club subclass. Plaintiffs have since filed a motion asking the Court to reconsider portions of its March 9, 2005 rulings.

85

Mutual Funds

        The Company entered into a settlement with the SEC with respect to revenue sharing and sales of classes of funds.

Investigations of Euro Zone Government Bonds Trade

        The German prosecutors have declined to take any actions against the employees in connection with this matter.

86