Money wire mistake

[azucena]

www.cnn.com/2021/02/16/business/citibank-revlon-lawsuit-ruling/index.html


    "Citibank, which was acting as Revlon's loan agent, meant to send about $8 million in interest payments to the cosmetic company's lenders. Instead, Citibank accidentally wired almost 100 times that amount, including $175 million to a hedge fund. In all, Citi (C) accidentally sent $900 million to Revlon's lenders."

Wow!  We've all been there in fat-fingering a payment but this is crazy.

[wvugurl26]

I don't even understand how it went through. Apparently they have no edits at all.

[tskeeter]

Feb 17, 2021 13:19:54 GMT -5 wvugurl26 said:

I don't even understand how it went through. Apparently they have no edits at all.

I saw something fairly similar back in my auditing days.  A field overflow in an accounts payable program triggered some logic that should have generated a check for a negative dollar amount.  Only the check printing and reporting programs were designed to only print numbers in the amount field.  No minus signs.

Because of the type of activity we were involved in at the time, and who the vendor we were paying was, the amount of the check would have been considered reasonable.  And would have agreed with what was reported in the check register report.  So the check passed through one informal and two formal levels of manual review before being issued.  Oops!  Maybe the manual review procedures weren’t as well designed as they could have been.

I wonder if the Citi goof was simply the result of sloppy administration of manual control procedures, or if there is more to the story that would make what happened easier to accept.

[Tiny]

I'm guessing the Really Big Numbers looked fine at various check points on paper and on computer screens - when it got to the "ACH" or wire part of it is probably when it picked up some extra zeros OR lost negative signs OR duplicate rows/charges/transactions were sent.    Judging from the issues I see with uploading transactions/invoice info to a billing system - I'm leaning towards duplicate transactions were sent.   I would think the banks have relatively modern software (21st century).    The only places I have trouble with Really Big Numbers is when we have to squeeze data thru a 1980's era "upload" process that's Propriatary software and I can't change it (I can feed it data - it squishes thru the black box - and it pops out in the accounting database)    I guess back in the 80's handling a single line item charge for 1,000,000.00 was unbelievable.  and every byte you could save on data storage was important.  

[raeoflyte]

I don't get why the "joking" was included in the law suit as damning? Who wouldn't be thinking that?

When I was a closer I accidentally wired money to a title company twice for a loan closing. $80k and they sent it back right away. I was so young and naive it never occurred to me that the title company wouldnt return it.

[wvugurl26]

I saw another article today. The amount Citi ended up sending was the total loan payoffs. Loans aren't due until 2023. There's a law in NY that if you send an excess payment for a debt absent guidance to the contrary, they are allowed to keep it if it satisfies the debt. Apparently the excess amounts added up to payoffs down to the penny. It took Citi some time to realize the screw up and ask for the money back. Some of the lenders didn't send it back and cited the NY law. The court sided with the lenders in the first round.

[gs11rmb]

Feb 18, 2021 11:48:11 GMT -5 raeoflyte said:

I don't get why the "joking" was included in the law suit as damning? Who wouldn't be thinking that?

When I was a closer I accidentally wired money to a title company twice for a loan closing. $80k and they sent it back right away. I was so young and naive it never occurred to me that the title company wouldnt return it.

I'm guessing it's because the title company was owed $80K and not $160K and they're not allowed to keep money that's not legally owed.  In this instance, the receiving companies were owed the money but just on a different payment schedule.

I'm also wondering if this had happened in 'normal' times if the money would have been returned?  Revlon's profits are hurting right now so the banks, hedge funds, etc. who loaned the money in the first place may have concerns about getting paid back.