Citi's $900 Million Loan Blunder Heads to Regulators and Court

finance.yahoo.com
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(Bloomberg) -- Citigroup Inc.'s accidental payment of about $900 million to Revlon Inc.'s lenders is facing scrutiny on two fronts -- in private talks with regulators and a public fight in court.Behind the scenes, the bank has begun briefing watchdogs including the Office of the Comptroller of the Currency
(Bloomberg) -- Citigroup Inc.'s accidental payment of about $900 million to Revlon Inc.'s lenders is facing scrutiny on two fronts -- in private talks with regulators and a public fight in court.

Behind the scenes, the bank has begun briefing watchdogs including the Office of the Comptroller of the Currency and the Federal Reserve about how it mistakenly misdirected so much money, according to people familiar with the matter, who asked not to be identified discussing confidential talks. On Monday, the bank sued Brigade Capital Management LP, seeking to recoup a share of the wayward funds.

Citigroup, the third-largest U.S. bank, hasn't offered a public explanation of how the "operational mistake," as its lawsuit labeled it, occurred. While errors are inevitable in an industry that moves trillions of dollars daily, the massive over-payments have captivated Wall Street and raised questions about safeguards within the firm's franchise tending to syndicated loans.

Citigroup was preparing to resign as administrative agent for the Revlon loan when it accidentally wired roughly $900 million to the lenders' accounts last week amid a bitter fight between the cosmetics company and creditors. While some opted to return the funds to Citigroup, others including…
Jenny Surane, Chris Dolmetsch, Katherine Doherty and Jesse Hamilton
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