Calling the incident one of the “biggest blunders in banking history,” a U.S. District Court judge has ruled that Citibank can’t get back the $500 million it accidentally wired to a Revlon cosmetics lender.
The bank, acting as Revlon’s loan agent, was supposed to wire about $8 million in interest payments to the lender — but instead sent 10 times that amount, including $175 million to a hedge fund, court paperwork reveals.
“We strongly disagree with this decision and intend to appeal,” a Citi spokesperson said Tuesday. “We believe we are entitled to the funds and will continue to pursue a complete recovery of them.”
All totaled, the bank sent out $900 million but has since gotten $400 million back.
While U.S. law usually sides with the bank in cases like this, New York law includes a rule known as the “discharge-for-value-defense.”
It states if the person who receives the money is entitled to it and didn’t know it was accidentally wired, they get to keep it.
And although it wasn’t supposed to be paid back all at once, the lender was owed the money, the judge ruled.
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