Citi Wins Errant Revlon Wire Transfer Appeal
(8 September 2022 – United States) A U.S. appeals court has ruled in favour of Citi in the bank’s attempt to recoup US$500 million of its own funds that it unintentionally transferred to Revlon.
The high profile case draws attention to inherent financial institution (FI) risks in an industry that oversees US$5.4 trillion in wire transfers per day.
In August 2020 Citi mistakenly prepaid an US$894 million loan for billionaire Ronald Perelman’s cosmetics company that was not due until 2023. The bank intended to make a routine US $7.8 million interest payment, and some recipients returned their payouts however ten asset managers whose clients included the Revlon lenders retain the funds they received.
Citi then sued Revlon to resolve the complex legal definitional challenge over lender status that emerged after the Bank erroneously transferred US$900 million to the company’s lenders. The asset managers asserted that a prepayment seemed plausible because Perelman had bailed out Revlon before while Citi stated that the overpayment left the asset managers with a huge windfall. Revlon filed for Chapter 11 bankruptcy protection on 15 June 2022.
“The matter is a massive unforced error and the bank has assured regulators it has put significant, additional controls in place” commented Citi CEO Jane Fraser.
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