NEW YORK (Reuters) - A federal appeals court on Tuesday said a Citigroup ( C/PN ) vice president was not entitled to a share of a $400 million civil fine that the bank agreed to pay in October 2020 over its risk management failures.

The 2nd U.S. Circuit Court of Appeals in Manhattan said Tamika Miller did not show that her whistleblowing over Citigroup's ( C/PN ) alleged altering of audit reports obligated the bank to pay a penalty, leading to its settlement with the Federal Reserve and the Office of the Comptroller of the Currency (OCC).

Miller said Citigroup's ( C/PN ) conduct violated its $700 million settlement in 2015 with the Consumer Financial Protection Bureau over its credit card business, and its $35 million settlement the same day with the OCC over its marketing practices.

However, Circuit Judge Denny Chin, writing for a three-judge panel, said that federal law gave the OCC discretion, but not an obligation, to fine Citigroup ( C/PN ) over the audit reports. He said that doomed Miller's accusation that the third-largest U.S. bank hid its compliance failures to avoid a fine that the government was entitled to collect.

Chin also said that the lawsuit by Miller, a Citigroup ( C/PN ) risk management employee since 2014, was "bereft of the details needed to provide Citibank with 'fair notice' of her claim, and instead resembles an attempt to use the litigation process to discover hypothetical wrongdoing."

Lawyers for Miller did not immediately respond to requests for comment. Citigroup ( C/PN ) did not immediately respond to similar requests.

Miller sued under the federal False Claims Act, which lets whistleblowers sue on behalf of the government and share in recoveries, typically 15% to 30%.

Such cases typically argue that companies received money they weren't entitled to. Miller's case was a "reverse false claim" contending that Citigroup ( C/PN ) kept money it should have paid.

Jane Fraser, Citigroup's ( C/PN ) chief executive, has made cleaning up the New York-based bank's regulatory failings a top priority since taking over in March 2021.

The case is U.S. ex rel Miller v Citibank NA, 2nd U.S. Circuit Court of Appeals, No. 22-1615.