UPDATE [16/05/21]: Citibank has still yet to successfully rectify its $645 million mistake despite filing to overturn the decision, calling the Revlon lender’s upset win against them “as wrong as it sounds.”
After committing what many are acknowledging to be “the biggest blunder in banking history”, Citibank will not be allowed to recover US$500 million (AU$644.63 million) which was accidentally wired to lenders of makeup brand Revlon by mistake, US District Court Judge Jesse Furman has ruled.
According to CNN, as Revlon’s acting loan agent, Citibank set out to transfer approximately US$8 million worth of interest payments to the cosmetic operation’s lenders. What happened instead – and the reason for all the headlines – is that close to one hundred times the intended amount was sent out, including US$175 million to a hedge fund. In total, Citibank had accidentally wired US$900 million to Revlon’s lenders.
While some lenders offered their cooperation in returning the misplaced millions, others did not. Naturally, Citibank wasted no time by filing a lawsuit in an attempt to reclaim the money. Currently, it has still yet to see the remaining half billion from ten investment advisory firms.
Ordinarily, the law would punish those who misappropriate funds deposited to their accounts in such a fashion, but in New York – where this ruling was passed – there’s a legal exception known as “discharge-for-value-defense”. Essentially, if a beneficiary is otherwise entitled to the money and did not know it was accidentally wired, they are within their rights to keep said money. Given how the sum was the exact amount Citibank owed (“to the penny”) – albeit over a much longer period of time – Revlon lenders had a viable legal standing.
To slap some salt into the wound, Judge Jesse Furman issued the following:
“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 $US1 billion – would have been borderline irrational.”
But the saga isn’t over just yet. An appeal from Citibank is more than likely given the magnitude of this fuck up, meaning all those lucky lenders can’t exactly stuff their duffle bags and head south of the border.
“We strongly disagree with this decision and intend to appeal,” reads the official Citigroup statement.
“We believe we are entitled to the funds and will continue to pursue a complete recovery of them.”
Either way… someone’s definitely getting fired.