[ by Melanie Gretchen ]

Citigroup can keep its victory over Abu Dhabi Investment Authority after a Manhattan federal judge on Monday rejected claims by the fund.  It alleged that the original ruling in favor of Citi ignored applicable law and was "fundamentally unfair" by depriving the fund of a chance to properly present its case.  After 24 witnesses over 16 days and 5,988 exhibits, U.S. District Judge George Daniels ruled that the decision by the American Arbitration Association panel will stand.

Federal Findings and Allegations. In 2007, the fund's $7.5 billion investment gave it a 4.9% stake in Citi, making it the largest individual shareholder of the 3rd-largest U.S bank.  At the time, Citi also accepted other investments around that time to shore up its capital base, amid billions of dollars of writedowns linked to subprime mortgages.  Nevertheless, the New York-based needed a series of federal bailouts, which it has since repaid.

Yet Judge Daniels found no fault in the panel's ruling.  The 3-person arbitration neither was "guilty of misconduct" nor acted in "manifest disregard" of the law.  In his decision, he cited standards of proof he said could justify throwing out an award under the Federal Arbitration Act.  Despite its victory, Citi may not be able to call itself a winner, considering its shares trade at a little over one-tenth of their level when the Abu Dhabi fund made its investment.

The case: Abu Dhabi Investment Authority v. Citigroup Inc, U.S. District Court, Southern District of New York, 12-00283.

For further details, go to [Reuters, 3/5/13].