A US District Court judge ruled that Citibank could not recover the nearly half a billion dollars it had mistakenly sent to the creditors of Revlon, in a mistake described as one of the “biggest blunders in banking history,” according to the US network CNN. .
Citibank, who was acting as a loan agent for Revlon, had intended to send about $ 8 million in interest payments to the cosmetics company’s lenders and instead, Citibank mistakenly sent nearly 100 times that amount, including $ 175 million. To a hedge fund in total, and the bank mistakenly sent $ 900 million to Revlon’s lenders.
Citibank filed a lawsuit in August asking for its money to be returned, but it has yet to receive $ 500 million from 10 investment advisory firms after the transfer..
Although the law usually punishes those who mistakenly spend money deposited in their accounts, especially since unintended transfers are common in the digital age, and can be recovered immediately, New York law has exceptions to this rule, known as “discharge in exchange for value due.”“.
CNN explains that if the beneficiary was owed the money and did not know it was connected in error, he could keep it. Revlon’s lenders said they believed Citibank was making prepayments for a loan, as the money transferred was the exact amount. Until the last penny Citibank owes them, even though the loan has not been fixed for maturity for some time..
Said Benjamin Finston, who represented the mortals“We are very pleased with Judge Foreman’s thoughtful, thorough and detailed decision“.
The court ruled that the lenders were justified in believing the payment was intentional. Citibank itself didn’t realize the scale of its mistake until about a day later.
The court document stated: “The belief that Citibank, one of the most sophisticated financial institutions in the world, made a mistake that had never happened before, and was sending in nearly a billion dollars – it would have become illogical.”“.
– .
