Citigroup got some good news recently, when a judge overturned an earlier ruling that awarded the sum of $10.8 million to an investor.
In July of 2013, a Financial Regulatory Authority arbitration panel ordered Citi to pay the sum to investor John Leopoldo Fiorilla as compensation for his investments in The Royal Bank of Scotland Group.
Fiorilla filed a claim in 2010, asking for $19.5 million in compensation from Citi, stating that the company and its advisers were responsible for significant losses incurred when he invested in the British financial institution, which later required a massive bailout.
The story takes an interesting turn in 2012. According to documents filed by Citi, Fiorilla and his lawyers agreed to a settlement figure of $800,000… until Fiorilla got a new lawyer and decided to continue with the arbitration.
This reversal seems to be at the heart of Judge Charles Ramos’ decision to vacate the award. In his decision, Ramos stated that Fiorilla’s "refusal to abide by the settlement...has resulted in a frivolous waste of counsel's time and efforts, as well as a waste of the scarce resources available."
Citi, obviously, is pleased with this outcome, which is seen as a rare event. These types of arbitration cases are rarely overturned and the appeals process involved is a somewhat nebulous one. Still, it represents a small victory for Citi, and it remains to be seen if this decision has larger implications for investors and financial institutions down the road.
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