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Citigroup Faces OCC Investigation for Fair Lending Breach

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Per a Reuters article, Citigroup (C - Free Report) is likely to be slapped with penalty for not offering mortgage discounts to the minority clients that it offered to others. The Office of the Comptroller of the Currency (“OCC”) is currently examining the matter to ascertain whether any violations to the Fair Lending Act was made.

Per the sources, Citigroup had disclosed the matter to regulators in 2017, when in a review of internal controls it found problems in "relationship pricing". The bank had told the regulator that the faults were not deliberate and remedial steps were taken.

Citigroup found that few minority borrowers did not get the discounts they were eligible to under a program, which gives a break on mortgage rates to customers who have kept large deposits or wealth at the bank, per the article.

The Wall Street biggie is sure that it has not violated any fair lending laws. Drew Benson, Citigroup’s spokesman told Reuters, "In 2014, Citi self-identified errors implementing its relationship pricing program which affected a small percentage of our mortgage customers".

He added, "We conducted a comprehensive review, reimbursed affected customers and have strengthened our processes and controls to help ensure correct implementation going forward."

Some Other Legal Involvements in 2018

In August 2018, Citigroup was fined $8.6 million by the Federal Reserve. The matter related to a review the regulator had conducted in 2010 of major residential mortgage servicers, when it was found that Citigroup had not satisfactorily assessed the risks associated with residential mortgage loan servicing, foreclosure activities and related functions.

Further, in September 2018, it was imposed a fine of $13 million by the federal regulators. The company was accused of malpractices related to its dark pool — CitiMatch — amid ongoing scrutiny around the U.S. share trading industry.

Moreover, the most recent legal involvement of the company is in Australia. Citigroup along with Deutsche Bank (DB - Free Report) have been charged of criminal cartel conduct during the sale of ANZ Bank’s shares worth A$2.5 billion ($1.9 billion) in 2015. Recently, the court adjourned the case until Feb 5, 2019 ordering the prosecution to file the full details of their case by Dec 11, 2018.

Shares of Citigroup have gained 2.1% over the past three months compared with industry’s rally of 2.3%.

Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

First Financial Bankshares (FFIN - Free Report) has witnessed stable estimates for current-year earnings in the past 60 days. Over the past six months, the company’s share price has increased 23.2%. It currently carries a Zacks Rank of 2 (Buy).

First Mid-Illinois Bancshares’ (FMBH - Free Report) 2018 earnings estimates have been revised slightly upward in the past 60 days. Additionally, the stock has jumped 6% in six months’ time. It currently carries a Zacks Rank #2.

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