Citigroup arbitration win in $4 bn Abu Dhabi case upheld

Judge says award not fundamentally unfair; Abu Dhabi fund had invested $7.5 billion in 2007
Comment E-mail Print Share
First Published: Tue, Mar 05 2013. 11 47 AM IST
The sovereign wealth fund had sought to rescind the November 2007 investment, or recover $4 billion in damages over what it called Citigroup’s fraudulent representations to induce it to invest. Photo: Hemant Mishra/mint
The sovereign wealth fund had sought to rescind the November 2007 investment, or recover $4 billion in damages over what it called Citigroup’s fraudulent representations to induce it to invest. Photo: Hemant Mishra/mint
A Manhattan federal judge on Monday rejected a bid by the Abu Dhabi Investment Authority to overturn an arbitration panel’s ruling favouring Citigroup Inc. in a dispute over a $7.5 billion investment by the fund in the bank.
US District Judge George Daniels rejected arguments that the October 2011 ruling by an American Arbitration Association panel, which reviews international disputes, ignored applicable law and was “fundamentally unfair” by depriving the Abu Dhabi fund of a chance to properly present its case.
The sovereign wealth fund had sought to rescind the November 2007 investment, or recover $4 billion in damages over what it called Citigroup’s fraudulent representations to induce it to invest.
David Elsberg, a partner at Quinn Emanuel Urquhart and Sullivan representing the Abu Dhabi fund, did not immediately respond to a request for comment.
Citigroup spokeswoman Shannon Bell said the bank is pleased with the decision
The $7.5 billion investment had given the Abu Dhabi fund a 4.9% stake in Citigroup, enabling it to surpass Saudi Prince Alwaleed bin Talal as the largest individual shareholder.
Citigroup also accepted other investments around that time to shore up its capital base, in the wake of billions of dollars of writedowns linked to subprime mortgages.
It nonetheless ultimately required a series of federal bailouts, which it has since repaid.
Daniels said the three-person arbitration panel neither was “guilty of misconduct” nor acted in “manifest disregard” of the law, citing standards of proof he said could justify throwing out an award under the Federal Arbitration Act.
He noted that the panel had listened to 24 witnesses over 16 days and accepted 5,988 exhibits in reviewing the case against the third-largest US bank.
Citigroup shares trade at a little over one-tenth of their level when the Abu Dhabi fund made its investment, after accounting for a reverse stock split.
The shares closed on Monday up 83 cents at $42.94 on the New York Stock Exchange.
Comment E-mail Print Share
First Published: Tue, Mar 05 2013. 11 47 AM IST
blog comments powered by Disqus
  • Wed, Sep 17 2014. 04 45 PM
  • Wed, Sep 10 2014. 03 54 PM
ALSO READ close

Citigroup said to weigh sale of Japan consumer bank business

Subscribe |  Contact Us  |  mint Code  |  Privacy policy  |  Terms of Use  |  Advertising  |  Mint Apps  |  About HT Media  |  Jobs
Contact Us
Copyright © 2014 HT Media All Rights Reserved