Citigroup Bank Error in Executive’s Favor: Collect $900.000

Thursday, July 7, 2011
Robert D. Kraus

Citigroup bank error in your favor; collect $900,000.

It’s the real life version of the board game Monopoly. Last week, Citigroup lost an arbitration case in which it tried to claw back $900,000 that it said it “mistakenly” paid to a former executive, Anthony Orefice.

Mr. Orefice worked at Citigroup for 14 years. In 2007 he was let go as part of a standard work force reduction, according to the award filed with the Financial Industry Regulatory Authority, Wall Street’s self-policing organization, which provides the forum for arbitration like Mr. Orefice’s. Citigroup paid Mr. Orefice $900,000 in late January 2008, a special payment described as part of a “separation agreement and release.”

This is where Citigroup’s troubles begin. Citigroup, the arbitration award says, only meant to give Mr. Orefice one payment. Citigroup claimed in arbitration that Mr. Oredice “in essence received a $900,000 payment in error.”

Not so fast, say regulators.

A Finra arbitration panel found that Citigroup entered “into two separate and enforceable” agreements. “While Claimant may not have wished to twice pay Respondent $900,000.00, Claimant drafted two separate contracts calling for such payments, and made payments pursuant to those contracts,” the panel wrote in its finding against Citigroup.

Robert D. Kraus, a lawyer for Mr. Orefice, said the arbitrators “reached the correct conclusion, which is that when you sign an agreement and then perform under it you can’t claim mistake and get out from underneath it.”

A Citigroup spokeswoman said the firm was “disappointed” with the award and declined to comment on whether the bank planned to appeal.

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