Citigroup Won’t Recover $ 500 Million Accidentally Transferred To Revlon Lenders, By Judge’s Rules
Citigroup (NYSE: C) made a huge mistake last year by accidentally transferring $ 900 million to several lenders of the cosmetic brand Revlon.
Now he’s really going to have to pay for this mistake.
A US District Court in New York recently ruled that 10 asset managers will not have to return more than $ 500 million they received from Citigroup in error, according to Bloomberg.
“We strongly disagree with this decision and intend to appeal,” Danielle Romero-Apsilos, spokeswoman for Citigroup, said in a statement. “We believe we are entitled to the funds and will continue to pursue their full recovery.”
The mess started last August when Citigroup $ 900 million by mistake to several Revlon lenders, an error the bank later attributed to a “clerical error” and “outdated” software.
Revlon’s lenders loaned the company $ 1.8 billion in 2016 to help acquire makeup brand Elizabeth Arden. Citigroup served as the agent for the arrangement.
The $ 900 million apparently covered the money Revlon owed its lenders, and some of them refused to repay Citigroup the portion they received. The bank then continued some of Revlon’s lenders trying to get the funds back.
But today, U.S. District Court Judge Jesse Furman ruled that several of the lenders who mistakenly received the funds failed to repay Citigroup more than $ 500 million.
“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 almost $ 1 billion, would have bordered on irrationality. “Furman wrote in his ruling, according to Bloomberg. .
Citigroup was criticized in 2020 for long-standing weaknesses in the bank’s internal controls over data, compliance and risk management.
Regulators hit the bank with a $ 400 million fine for these deficiencies.
The case also reportedly forced CEO Michael Corbat to retire earlier than expected. The bank is already spending billions to correct these regulatory issues.
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