Citi fails to escape lawsuit brought by “FX Cartel” trader
Judge Victor Marrero of the New York Southern District Court has dashed the ambitions of Citi to dismiss a lawsuit brought by “FX Cartel” trader Rohan Ramchandani. In an order issued today, the Judge denied Citi’s motion to dismiss the case which alleges one count of malicious prosecution stemming from Citi’s disclosure of information about Ramchandani to the United States Department of Justice (DOJ) in connection with an investigation into a price-fixing conspiracy at Citi.
Let’s recall that Ramchandani began his employment at Citi in 2002. During the period relevant to this action, between 2004 and 2013, Ramchandani worked in Citi’s London offices, as the European head of Citi’s FX Spot Market trading desk.
Around June 2013, rumors began to spread in the press about widespread manipulation of Forex rates. The DOJ and the United Kingdom’s Financial Conduct Authority (FCA) both commenced investigations into the alleged manipulation. Meanwhile, press reports started to make clear that criminal charges against financial institutions participating in the FX Spot Market were imminent.
Ramchandani alleges that in early 2014 Citi began a campaign to use him as a scapegoat in both the press and with government investigators. Ramchandani alleges that during this time, Citi began to contact regulators and the press as part of “a calculated scheme” to deflect the blame for any wrongdoing onto him.
Ramchandani alleges that Citi repeatedly implicated him in communications with regulatory agencies investigating the purported conspiracy. For example, he contends that Citi contacted the FCA on the date of his dismissal, stating Ramchandani was to be fired. Instead of limiting the message in the way it had assured Ramchandani it would, Citi told the FCA that it did “not feel comfortable” with Ramchandani’s conduct after reviewing his chatroom communications.
Given that the DOJ investigation was also ongoing at the time, Ramchandani argues that Citi likely made the same disclosure to the DOJ.
On January 10, 2017, the DOJ announced Ramchandani had been indicted along with two other chatroom participants from other financial institutions. Ramchandani insists that he was indicted because of Citi’s false statements putting him at the center of the case. Ultimately, after trial in October 2018, Ramchandani was acquitted.
Ramchandani initiated this action on October 2, 2019.
In its motion to dismiss, Citi argued that Ramchandani has failed to plausibly allege three of the four requisite elements of a malicious-prosecution claim.
- First, Citi argued that the DOJ independently decided to investigate and ultimately prosecute Ramchandani, and the Complaint does not plausibly allege that Citi “induced the prosecution and overtook the prosecutor’s own volition.”
- Second, Citi maintains that the DOJ had probable cause for the criminal charges against Ramchandani, and the Complaint fails to allege that the grand jury indictment was procured by fraud, perjury, suppression of evidence, or bad faith.
- Third, Citi said that the Complaint fails to specifically allege malice because Ramchandani has not identified any specific misstatements or falsified evidence the bank made or provided to the DOJ.
The Court did not find these arguments convincing. While New York courts have at various times used different tests for what constitutes the initiation of a criminal proceeding, the Court is persuaded that Ramchandani has the better interpretation. Furnishing false information to law enforcement authorities is sufficient to satisfy the first element of a malicious-prosecution claim when, at the time the information was furnished, the person providing it knew it to be false, the Judge ruled.
Further, drawing all reasonable inferences and resolving doubts in Ramchandani’s favor, the Court concludes that this element has been sufficiently pled. As a threshold matter, the Complaint provides a plausible basis to conclude that Citi provided information about Ramchandani to the DOJ.
Finally, the Court was persuaded that Ramchandani has plausibly alleged that Citi’s improper self-serving motive in procuring Ramchandani’s indictment rebuts the presumption of probable cause. Ramchandani claims that Citi mischaracterized his chatroom communications and told the DOJ that he was criminally liable for price-fixing based on those communications. Citi allegedly made these false representations because doing so would limit its liability to a single wrongdoer, thereby shielding the bank from large- scale consequences.
That the DOJ could not decode the chats without Citi’s assistance, as indicated in the DOJ’s sentencing memorandum, is enough to support a plausible inference that the indictment was “procured” based on Citi’s false statements, which in turn stemmed from an improper motive, the Court ruled.
Taking these allegations as true, and construing the Complaint liberally, the facts raise a plausible entitlement to relief, such that the dismissal is not proper at this stage of the litigation.
That is why, the Court ordered that the motion filed by defendants CitiBank National Association, CitiGroup Inc., and Citicorp to dismiss the Complaint of plaintiff Rohan Ramchandani is denied.