* Judge says award not fundamentally unfair
* Abu Dhabi fund had invested $7.5 billion in 2007
By Jonathan Stempel and Nate Raymond
March 4 A Manhattan federal judge on Monday
rejected a bid by the Abu Dhabi Investment Authority to overturn
an arbitration panel's ruling favoring Citigroup Inc in a
dispute over a $7.5 billion investment by the fund in the bank.
U.S. 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
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 percent 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 U.S. 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.
The case is Abu Dhabi Investment Authority v. Citigroup Inc,
U.S. District Court, Southern District of New York, 12-00283.