1. News Articles
  2. Related News Articles
News Article Details

Citigroup Ordered to Pay Investor $11 Million

Posted on 07 Aug 2013 by Neilson

Facebook LinkedIn Twitter Google

Citigroup payment to investorA FINRA arbitration panel has ruled that Citigroup and one of its former branch managers must pay an investor more than $11 million combined in compensation for losses related to an investment in a foreign bank.

The claimant, John Fiorilla, a legal adviser to the Holy See, came to Citigroup in 2006 looking to de-risk a $16 million stock position in Royal Bank of Scotland, according to his attorney, Kevin P. Conway of Conway & Conway in New York. He had requested that Citigroup use derivatives to help hedge his position against losses, but the firm did not complete the request, Conway said. When the market collapsed in 2008, the account lost more than $15 million, he said.

"He repeatedly asked if they were hedging the stock, and they said that they were going to," Conway explained. "Unfortunately, they did not."

The claim accused the firm of "breach of fiduciary duty, negligence and gross negligence, failure to supervise and control, breach of contract," and other legal violations. It also named a former branch manager, Edward J. Mulcahy, for failing to supervise. Fiorilla's broker was not named because he had cooperated and had been told by others at Citigroup that the account would be de-risked, Conway said.

Citigroup denied the allegations, according to the award.

"We are disappointed with the award, which was not supported by the facts," a spokeswoman for Citigroup, Danielle Romero-Apsilos, said in an emailed statement. The firm refused to comment further.

Mulcahy, who began his career at Dean Witter Reynolds in 1982, moved to Citigroup through successive mergers, according to FINRA registration records. He retired recently from Morgan Stanley and could not be reached for comment. Morgan Stanley directed requests for comment to Citigroup.

Fiorilla initially requested $15.3 million in compensatory damages. After 24 hearing sessions, which took place from October 2012 to July 2013, a panel ordered Citigroup to pay $10,750,000 plus 9% interest from May 1, 2009 until the award is paid. Mulcahy was ordered to pay $250,000 plus interest.

"The client thinks it was a fair result [and] an equitable result," Conway said. "It was a long battle."

FINRA did not clarify the reasoning for their decision in the award.


Post a Comment
If you are a Storefront / Tradingfloor user, click here to login.
Note: As a guest user, please fill out the form below to post a comment.
Post your comments here.
Name :
Email Address :
Captcha :
Comments :
Character left : 2000