Supreme Court lets fraud lawsuit against Citigroup proceed

The U.S. Supreme Court declined on Jan. 12 to hear Citigroup’s bid to avoid a lawsuit accusing the bank of causing more than $1 billion of losses by orchestrating a vast fraud at the bankrupt Mexican oil and gas services company Oceanografia.

The justices turned away Citigroup’s appeal of a lower court’s May 2025 decision to revive the decade-old lawsuit by more than 30 plaintiffs including Oceanografia bondholders, shipping companies and Netherlands-based Rabobank. By doing so, the Supreme Court let the lower court’s decision stand.

Oceanografia provided drilling services to the state-owned oil company Petroleos Mexicanos prior to being seized by Mexico’s government in 2014. It was declared bankrupt two years later.

The plaintiffs accused New York-based Citigroup’s Banamex unit of advancing $3.3 billion to Oceanografia between 2008 and 2014, despite knowing that the company had too much debt and had forged Pemex signatures on authorization forms.

Citigroup later uncovered $430 million of fraudulent cash advances. The U.S. Securities and Exchange Commission fined Citigroup $4.75 million in 2018 over Banamex’s internal controls.

A three-judge panel of the 11th U.S. Circuit Court of Appeals found sufficient allegations that Citigroup withheld key information about Oceanografia from the plaintiffs, while benefiting from interest payments it collected on the advances.

The panel also said that assuming the allegations were true, it “strains credulity” that a sophisticated bank such as Citigroup would not have known what Oceanografia was doing.

Only the claims by bondholders were at issue in Citigroup’s appeal to the Supreme Court.

Citigroup said the bondholders should not have been allowed to pursue their “garden-variety” securities fraud civil claims under the Racketeer Influenced and Corrupt Organizations Act, or RICO, a federal anti-racketeering law that allows for triple damages.

The bank also said the 11th Circuit decision conflicted with rulings from three other federal appeals courts.

In response, bondholders said Congress did not intend to preclude their RICO claims simply because someone else, such as the SEC, might have pursued securities fraud claims.

The bondholders also said it was possible no private plaintiff could bring securities fraud claims because there was no allegation that anyone traded in reliance on fraudulent statements.