New York, USA (CNN) – After committing one of “the biggest fatal mistakes in banking history”, the US judiciary has decided that Citibank will not be able to recover about half a billion dollars that the bank mistakenly sent to Revlon lenders, according to the ruling. US District Court judge.
Citibank, who was serving as a loan agent for Revlon, had intended to send about $ 8 million in interest payments to the lenders of the famous cosmetics company, but instead mistakenly sent about 100 times that amount, including That’s $ 175 million to a hedge fund.
Citibank accidentally sent a total of $ 900 million to Revlon’s lenders.
Citibank filed a lawsuit in August seeking the return of its funds, but so far, it has not received $ 500 million from 10 investment advisory firms that received the unintended transfer.
The law usually penalizes those who mistakenly spend money deposited into their accounts. Unintentional transfers are common in the digital age, and they can be paid immediately, but New York law has exceptions to this rule, and if the recipient is owed the money and he did not know that he was transferred to him by mistake, he can keep it.
Revlon’s lenders said they believed Citibank was making prepayments to obtain a loan, especially since the amount that was transferred in error was the “exact amount” that Citibank owed them to, although the loan was not specified. To maturity for some time.
“We are very pleased with Judge Jesse Foreman’s thoughtful, comprehensive and detailed decision,” said Benjamin Finston, who represented lenders, Brigade and HPS investment partners.
The court ruled that the lenders were justified in believing that the transfer was intended. Citibank did not realize the extent of his mistake until nearly a day later.
The court’s ruling stated that “the belief that Citibank, one of the most advanced financial institutions in the world, had made an unprecedented mistake of nearly a billion dollars, would have been illogical.”
The judge’s ruling used internal conversations between HPS employees as further evidence that creditors had no idea the transfer was in error until after Citibank sent out notices. In conversations a day after the wrong conversion, HPS employees joked to each other about the error, saying:
DFREY5: I feel bad for the guy who rounded out a big wrong payment of $ 900 million. Not a great move in his career …
JRABINOWIT12: It definitely looks like they will be looking for new people for their operations department
DFREY5: How was your day today my dear It was fine … except that I accidentally transferred $ 900 million to people who were not supposed to get it.
DFREY5: This is a downside to working from home. Perhaps it was his dog who pressed the keyboard.
Lenders cannot take the money and run. And since there is an option to appeal, the temporary restraining order remains in effect.
“We strongly oppose this decision and intend to appeal it. We believe we are eligible to receive the funds and will continue to seek full recovery,” Citigroup said in a statement.
The pandemic has hurt beauty brands, such as Revlon, which today are trading more than 40% less than last year.