John Leopoldo Fiorilla, a legal adviser to the Holy See, was awarded $10.8 million plus interest by an arbitration panel over his Citigroup Inc. (C:US) broker’s handling of an investment in Royal Bank of Scotland Group Plc.
Fiorilla asked Citigroup to hedge his RBS holding of about $16 million before the credit crisis and then saw it dwindle to less than $1 million as the New York-based lender failed to protect him, according to Kevin Conway, his lawyer. A Financial Industry Regulatory Authority arbitration panel found the firm liable for Fiorilla’s losses, according to a July 30 ruling that doesn’t describe the allegations in detail.
Fiorilla transferred his account holding RBS stock to Citigroup after meeting a broker while they were serving as honorary ushers at St. Patrick’s Cathedral in New York, Conway said in a phone interview. The bank’s representative told Fiorilla he could buy an option to protect against losses without selling the stock, which he had inherited and didn’t want to sell for tax reasons, Conway said.
“Citibank told him that they could do it and they just didn’t do it,” Conway said. “He went to the representative on no less than eight occasions and said to him, ‘What are you doing with my stock?’ He was told repeatedly that ‘We’re working on it.’”
Shares of RBS plummeted during 2008’s credit crisis as the firm took 45.5 billion pounds ($69 billion) from U.K. taxpayers in the largest bank bailout in history. The stock fell 87 percent in 2008 and 41 percent the following year. It has since climbed 14 percent.
Danielle Romero-Apsilos, a spokeswoman for Citigroup, said the ruling wasn’t justified.
“We are disappointed with the award, which was not supported by the facts,” she said in an e-mail. She declined to comment on Conway’s description of events.
Fiorilla is a legal consultant to the Holy See Mission to the United Nations, according to Lucas Swanepoel, the mission’s legal attache. Cardinal Giovanni Cheli oversaw his 2003 wedding at the Church of St. Stephen of the Abyssinians in the Vatican City, according to a notice in the New York Times.
Fiorilla has been decorated by the Italian government and the Sovereign Military Order of Malta, according to his profile on the website of the Guggenheim museums. He is chairman of the executive committee of the advisory board of the Peggy Guggenheim Foundation, the website shows.
“Citigroup tried to make the argument that based on who he is, he didn’t deserve any money,” said Richard Fleming, who also represented Fiorilla. “The panel obviously disagreed.”
The Finra panel also ordered Edward Mulcahy, a former Citigroup employee, to pay $250,000. Mulcahy, a branch manager, was accused of failing to supervise a financial adviser and “overconcentrated positions” in a customer’s account, according to his Finra records.
Jeffrey L. Friedman, an attorney who represented Mulcahy and the bank, referred to the company’s statement when asked to comment on the ruling. He didn’t immediately respond to a message on Conway’s description of the case.
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