Link: https://www.wsj.com/articles/schoolyard-justice-in-federal-court-11623171249
Excerpt:
The bank administered a loan of some $1 billion, sending payments from Revlon to the lenders. Citibank mistakenly sent a wire transfer of the entire principal amount due when it only intended a single installment.
Under established law, the money that Citibank wired should be repaid because it was sent by mistake. But U.S. District Judge Jesse Furman upset settled law and allowed lenders to keep the money on the ground that the recipients did not have notice that the funds had been sent erroneously. If that became the rule, it would upset the important relationships among lenders, borrowers and trusted intermediaries.
….
Mistakes like this occur with surprising frequency. In 2017, the German bank KfW mistakenly transferred $5.4 billion to lenders. In China, the bank Rural Commercial Bank in Changsha thought that a customer’s 10-digit account number was actually the amount of money to be transferred, and mistakenly sent 1.2 billion yuan (around $190 million) to the customer. Deutsche Bank recently sent $6 billion to a U.S.-based hedge fund in error. In all these cases, the banks recovered the errant funds transfers almost immediately.
Author(s): Jonathan Macey
Publication Date: 8 June 2021
Publication Site: Wall Street Journal