Judge rules that Citibank cannot recover $ 500 million that he accidentally wired

Judge rules that Citibank cannot recover $ 500 million that he accidentally wired

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Citibank, which acted as Revlon’s lending agent, was intended to send about $ 8 million in interest rates to the cosmetics company’s credit providers. Instead, Citibank accidentally wired nearly 100 times the amount, including $ 175 million to a hedge fund. Everything, Citi (C) accidentally sent $ 900 million to Revlon’s borrowers.

Citibank filed a lawsuit in August for the repayment of its funds, but it still did not receive $ 500 million from ten investment advisory firms after the accidental transfer.

The law usually punishes those who spend money accidentally deposited into their accounts. Accidental transfers are common in the digital age, and wires can be repaid immediately. A couple in Pennsylvania are facing charges of crime after accidentally pouring money into their account.

But New York law has exceptions to this rule, known as the “dismissal-for-value-defense.”

Citibank struggles to get wrong wired money back

If the beneficiary is entitled to the money and did not know that it was accidentally wired, they can keep it. Revlon lenders have said they believe Citibank is paying off a loan. The money that was accidentally wired was, after all, the exact amount “to the cent” that Citibank owed them, although the loan would not be repaid for some time.

“We are very pleased with Judge Furman’s thoughtful, thorough and detailed decision,” said Benjamin Finestone, who represented two lenders, Brigade and HPS Investment Partners.

‘Border irrational’

The court ruled that the borrowers were justified in believing that the payment was intentional. Citibank itself only realized the extent of its mistake almost a day later.

“To believe that Citibank, one of the most sophisticated financial institutions in the world, made a mistake that has never happened before, up to almost $ 1 billion – would have been irrational on the border,” the court document reads.

The judge’s ruling uses internal conversations between HPS employees as further proof that the creditors had no idea the wiring was faulty before Citibank sent notices. In the conversation, which was dated a day after the wrong wiring, HPS employees joked about the error:

DFREY5: I feel really bad for the person who made a $ 900mm mistake. Not a good career move. . . .

JRABINOWIT12: definitely looks like they’ll be looking for new people for their Ops group

DFREY5: How was the work of today treasure? That was fine, except I accidentally sent $ 900mm to people who would not like it

DFREY5: disadvantage of working from home. maybe the dog hit the keyboard

The moneylenders cannot take and manage the money. Since appeal is possible, a temporary restriction is still in force.

“We strongly disagree with this decision and intend to appeal. We believe we are entitled to the funds and will continue to pursue a full recovery from it,” Citigroup said in a statement.

The pandemic has makeup brands like Revlon (COMMENT)of which shares traded more than 40% lower than a year ago.

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