Citigroup cannot recoup Revlon payouts after nearly $900 million gaffe: U.S. judge

[turbinetree]

Source: Reuters

U.S. LEGAL NEWS
FEBRUARY 16, 2021 10:12 AM UPDATED 44 MINUTES AGO

By Jonathan Stempel 3 MIN READ

NEW YORK (Reuters) - A federal judge on Tuesday said Citigroup Inc is not entitled to half a billion dollars of its own money that it mistakenly wired in what he called “a banking error of perhaps unprecedented nature and magnitude.”

U.S. District Judge Jesse Furman in Manhattan said the Aug. 11, 2020, wire transfers to lenders of cosmetics maker Revlon Inc at issue were “final and complete transactions, not subject to revocation.”

A spokeswoman for Citigroup said the bank strongly disagrees with this decision and intends to appeal.

Reporting by Jonathan Stempel in New York; Additional reporting by Imani Moise in New York; Editing by Steve Orlofsky and Matthew Lewis





Read more: https://www.reuters.com/article/us-citigroup-revlon-lawsuit/citigroup-cannot-recoup-revlon-payouts-after-nearly-900-million-gaffe-u-s-judge-idUSKBN2AG1TJ

[hlthe2b]

1. Ahhh, pocket change.

No, I really don't like Citigroup.

[jimfields33]

2. I'm actually surprised by this ruling.

I’ve heard of banks putting money in a person’s account by accident and if spent the person is arrested. Large corporations win again.

[hlthe2b]

4. I haven't read the ruling and admittedly I am too (suprised). More will come out, I'm sure.

Especially if they lose on appeal.

[jimfields33]

5. That's true.

And honestly I didn’t read it either.

[Chellee]

14. Well, they can't spend it yet.

"But in a 101-page decision, following a six-day trial in December, Furman said the transfers were a “discharge for value,” matching “to the penny” what the lenders were owed.

The non-returning lenders believed, and were justified in believing, that the payments were intentional,” Furman wrote. “To believe otherwise - to believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly $1 billion - would have been borderline irrational.

Furman left in place a temporary ban on the lenders’ using the transferred funds, reflecting Citigroup’s expected appeal."

[Marcuse]

3. What happened to the human?

The New York-based bank blamed human error for the gaffe, and some lenders returned money they were sent.

[JudyM]

9. A bad day at the office.

Yikes.

[paleotn]

16. Last day at the office.

[bucolic_frolic]

6. Yeah, if you keep a deposit misdirected to your account, it's money to which you are "not entitled"

Corporation does it here. Walks away with it. I think this appeal has a good chance of success.

[quaint]

7. I think "not entitled" is the question.

From the link:

Acting as Revlon’s loan agent, Citigroup had wired $893 million to the cosmetic company’s lenders, appearing to pay off a loan not due until 2023, when it intended to send only a $7.8 million interest payment.

[mr_lebowski]

8. Exactly. If you or I sent a check to the Auto loan company for the full balance owed on a car

And then ran to a judge and said it was an 'error' and I want it back, what do you think the Judge would say?

[ToxMarz]

11. I think may have something to do with "at issue were final and complete transactions

at issue were “final and complete transactions, not subject to revocation.”

I don't know what would qualify as one, but they apparently aren't subject to revocation.

[TeamPooka]

15. yup

[SWBTATTReg]

12. Wow. I suspect that some heads will roll at Citigroup...and rightfully so. Multiple levels

of management too, concentrating via the upper levels of mgmt at Citigroup. There were probably multiple layers of approval of this payment prior to it going out, thus Citigroup had multiple internal levels (IMHO, or it should have at least (obviously)) that could have further investigated why such a large payment was going out the door, etc., and if they practiced due diligence, then they could have stopped the payments/banking errors.

[paleotn]

17. Sorry, couldn't resist.

[SpankMe]

13. If I want to delete an obsolete document from my computer...

...I get a follow-up dialog window that says "are you sure?" I have to think about it and be sure I want to delete that document. If it's the wrong document I'm trying to delete, I can cancel the deletion.

You'd think that Citibank (of all institutions) would have a two-click protocol for transferring amounts over $50M or something like that. Either an "are-you-sure" confirmation, or a dual security thing where they click "send" and then the command goes to an executive for a second review and confirmation before sending the money over.

They may already have this and there were a multitude of errors. But, sending almost $1B BY MISTAKE is some kind of incompetence. Wow.

[BumRushDaShow]

18. "Banking error" --reminds me of this