Bad news for banking giant Citigroup (C), as federal judges came down on Citigroup’s hopes to get a lawsuit against it dismissed in New York state. The suit will go through, noted a Reuters report, and Citigroup will have to defend accordingly. The news did not faze investors much, and shares were up fractionally in Wednesday afternoon’s trading.
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The lawsuit in question was brought in by New York Attorney General Letitia James, who accused Citigroup of “failing to reimburse customers who fall victim to online scammers.” Worse, James also filed suit against Citibank in January, noting that its own security failings led to the theft of “millions of dollars” from account holders.
Paul Oetken, a United States District Judge, upheld the lawsuits, though did dismiss some parts of the suit. The report noted that some of the claims were actually pre-empted by federal law, so those had to be tried outside of a state court.
Simplify, Simplify
While Citigroup’s lawyers are gearing up, so too is CEO Jane Fraser, who is on a simplicity tear within the company, according to a Business Insider report. Citigroup has launched a series of new initiatives designed to simplify operations, starting with substantial changes in its services and technology operations. This is a big change in and of itself; Fraser has previously described the services division as the bank’s “crown jewel,” so any change here will likely be felt—for better or worse—in the bottom line.
Citigroup has already simplified its operations, noted the report, but it will not rest on its laurels. It now plans a restructuring of the leadership team, which has already lost one of its heads. Co-chief information officer Shadman Zafar departed the company, with his workload apparently to be absorbed by now-sole CIO Jonathan Lofthouse.
Is Citigroup a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on C stock based on 13 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 59.02% rally in its share price over the past year, the average C price target of $88.97 per share implies 8.61% upside potential.
