Recipients of Citigroup Inc.’s $900 million error couldn’t help but mock the bank --and that could help Citi get the money back.

As it fights to recover funds it sent Revlon Inc. lenders in August, Citibank is working to convince a judge that 10 asset managers it’s suing knew the payment was a mistake, arguing in part that mocking chatter from some of them shows it.

“I feel really bad for the person that fat-fingered a $900 million payment. Not a great career move,” a lawyer for the bank read out at trial on Monday, quoting excerpts of electronic chats at one of the investment firms.

“How was work today, honey?” one of the participants messaged, imagining the dinner table conversation that night at home. “It was OK, except I accidentally sent $900 million out to people who weren’t supposed to have it.”

By Aug. 14, after major news media had reported the bungled payment, one vice president of the firm, HPS Investment Partners, was discussing the transfer with another and riffed on the title of a 1970s hit by the Steve Miller Band, according to a court filing by Citibank.

“As Steve Miller said, take the money and run,” he quipped.

Wall Street Watching
However embarrassing, the lighthearted chatter at HPS in the wake of the payment could work in Citibank’s favor. The bank argues that the lenders must return the money since it was clearly sent in error and isn’t theirs to keep. It has cited the mocking language as evidence that the firms knew the transfers were a mistake and not a full payment of the Revlon loans.

Citibank, acting as administrative agent on the Revlon loan, wired the $900 million out of its own pocket instead of the far smaller periodic interest payment it meant to make. It recovered about $390 million of the whopping error and sued asset managers for creditors that refused to give back $508 million.

On Monday, the fourth day of the trial, Scott Crocombe, managing director at HPS, testified that he took part in discussions at the firm of the huge unexpected transfer the day after HPS received it. Under questioning by John Baughman, the lawyer for Citibank, Crocombe said he didn’t know about the payment until learning of an error notice the bank sent out almost 20 hours later.

The defendants say the transfers were the exact amount owed their clients under a 2016 loan to the struggling cosmetics company and that nothing about the payment led them to think it was a mistake. Among the 10 firms the bank sued are HPS, Symphony Asset Management and Brigade Capital Management.

Biggest in Memory
The trial, which is being held by videoconference without a jury before U.S. District Judge Jesse Furman in Manhattan, shines a light on an error -- the biggest of its kind in recent memory -- that Citigroup has already had to explain to federal regulators. The case is being closely followed on Wall Street, especially in the syndicated loan industry.

HPS acts an investment manager for 18 clients that hold about $134.1 million of Revlon’s 2016 term loans, according to a filing Crocombe made with the court last week. On Monday, the judge, who will determine the outcome of the case, asked Crocombe to explain his thinking on why Revlon would pay off the loan rather than make a much smaller payment on unsecured bonds outstanding that triggered a November due date.

“There are situations in which a borrower or management, or the board of a borrower, if they become concerned about preference payment issues,” would make the decision to pay secured as opposed to unsecured debt, Crocombe said.

The case is Citibank NA v. Brigade Capital Management, 20-cv-6539, U.S. District Court, Southern District of New York (Manhattan).

This article was provided by Bloomberg News.