(Bloomberg) -- Citigroup Inc. lost a legal battle to recover half a billion dollars it sent Revlon Inc. lenders, after the embarrassing blunder forced it to answer to regulators and tighten its internal controls.

U.S. District Judge Jesse Furman in New York said 10 asset managers for the lenders -- which include Brigade Capital Management, HPS Investment Partners and Symphony Asset Management -- don’t have to return more than $500 million that Citibank said it mistakenly transferred in August while trying to make an interest payment.

Furman said prior court decisions forced him to conclude that the lenders were entitled to take the money because they were not aware that Citibank had make a mistake when it sent the funds.

“The transfers matched to the penny the amount of principal and interest outstanding on the loan,” he said in his decision. “The accompanying notices referred to interest being ‘due,’ and the only way in which that would have been accurate was if Revlon was making a principal prepayment. And it appears that no mistake of the size or nature of Citibank’s had ever happened before.”

Furman found that the lenders, faced with these circumstances, “believed, and were justified in believing, that the payments were intentional.” He said that “to believe that Citibank, one of the most sophisticated financial institutions in the world, had made a mistake that had never happened before, to the tune of nearly $1 billion would have been borderline irrational.”

(Updates with excerpt of judge’s decision.)

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