Citigroup (C) - Get Report on Tuesday lost a round in a legal case after a federal judge said that the financial-services giant could not recoup $500 million that it mistakenly wired to lenders tocosmetics maker Revlon. (REV) - Get Report
U.S. District Judge Jesse Furman in Manhattan said the Aug. 11 wire transfers at issue were "final and complete transactions, not subject to revocation."
"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 $1 billion would have been borderline irrational," Furman said, according to Bloomberg.
Those payments were part of more than $890 million Citigroup paid to Revlon's lenders through its role as Revlon's loan agent. Those payments closed a loan that was not due until 2023.
The New York financial-services giant had intended only to make a $7.8 million interest payment on the loans. It attributed the mistake to human error.
Some lenders returned the money they were sent, but 10 asset managers refused, leading Citigroup to sue to recoup the estimated $501 million they received.
Citi didn't immediately return a call from TheStreet seeking comment.
Last month, Citi posted stronger-than-expected fourth-quarter earnings, due in part to a $1.5 billion release of reserves for potential loan losses.
Citigroup earned an adjusted $2.09 a share, up 60% from the year-earlier quarter and ahead of the Wall Street consensus forecast of $1.31 a share.
Group revenue, Citigroup said, fell 10% to $16.5 billion, missing analysts' estimates of $16.7 billion.
Citigroup said it released around $1.5 billion linked to the release of previous loan provisions. Its year-end allowance for bad loans was measured at around $25 billion.
Citi shares at last check were trading up 0.7% at $64.10.