CitiMoney - Citi argues that the program was intended to move funds that belonged to Citi, namely attorney fees and interest awarded through litigation. The funds also involved customers’ unclaimed money. James Van Dyke, the principal and founder of Javelin Strategy & Research of Pleasanton, Calif., said stealing may be too strong a word for what happened. ” Something that egregious would result in the bank being shut down” by regulators, he said. A spokeswoman for Brown said no bank regulator was involved in the investigation.

However, Van Dyke said Citi could be at fault in instances where, for example, it did not make enough of an effort to find the customers who failed to claim their funds. Most likely, the funds were moved to accounts the customers could not review or access, and therefore the issue might be accounting rather than malicious intent, he said.

The settlement, approved by the Superior Court of California, county of Sacramento, includes an injunction that will prevent Citi from re-initiating this sweep practice, refund “all improperly swept funds” including 10% interest, and the civil penalty. In addition, Citi will hire an independent auditor to review its own work once the refund process is complete. Read Full Article