Citigroup Inc, multi-national American investment bank had lost a legal battle to recover more than $500 million. The investment bank had mistakenly wired the money to cosmetics firm Revlon Inc (NASDAQ: REV) on August 11, 2020. Citigroup intended to send $7.8 million interest payments but ended up making one of the largest mistakes in history of U.S. banks.
On Tuesday, U.S. District Judge Jesse Furman ruled that ten asset managers for the lenders including HPS Investment Partners, Brigade Capital Management and Symphony Asset Management are not obliged to return $504 million to Citibank.
Mr. Furman argued that it doesn’t make sense that a financial institution like Citibank makes such a mistake with that amount of money. Mr. Furman ruled in favor of the ten investment firms that totaled more than $500 in the mistaken wire transfers.
“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,” wrote Furman.
Citigroup can’t retrieve money according to NY law
U.S. law obliges receivers to return the money if it’s mistakenly wired. However, Furman cited that the case is an exception in New York. He added that the city allows recipients to not return the funds if the recipient doesn’t find out about the mistake upon money receival, and if they discharge a valid debt.