This is the worst Wall Street mishap in years. Citibank accidentally transferred $ 900 million dollars to a group of lenders who had a dispute with Revlon
Photo: TIMOTHY A. CLARY / AFP / Getty Images
Citibank mistakenly transferred more than $ 900 millions of dollars to a group of lenders who had a business with the Revlon beauty company.
The bank intended to make a payment of $ 8 million of interest , however the money went to give to Revlon’s lenders.
About 10 companies that benefited from the transfer refused to return that money to Citibank , who filed a lawsuit to recover the money since August based on the idea that in the United States the law is used to punish people who spend money that was accidentally deposited in their account. However, the law in New York, where the transfer originated, has an exception to the rule . If the beneficiary is entitled to the money and did not know it was accidentally transferred, they can keep the amount.
On Tuesday a federal judge ruled that the beneficiaries do not have to return the money . But in this case, the creditors had reason to believe that the payment was intentional, wrote in his judgment Judge Jesse M. Furman, of the United States District Court in Manhattan, as reported by The New York Times .
“To believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, worth almost a billion dollars, would have been almost irrational, ”the judge wrote.
Citibank said that strongly disagreed with the decision and intended to appeal. “We believe we are entitled to the funds and will continue to try recover them completely, ”said Danielle Romero-Apsilos, a Citi spokeswoman. For his part, Robert Loigman, the attorney representing the creditors, said his clients were “extremely satisfied with Judge Furman’s decision.”
Citibank acted as agent for loans from Revlon and intended to send about $ 8 million in interest payments to the cosmetic company’s lenders whose shares are trading down by 40% due to the coronavirus pandemic crisis.
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Judge Furman, recognizing that an appeal was likely, upheld a temporary restraining order that prevented 10 investment firms use the money.
Furman said his decision might have been different if he could have “written on a blank slate,” but that the precedents forced him to rule in favor of creditors.
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