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Citigroup Wins Halt to $383 Million Arbitration Case

May 3 (Bloomberg) -- Citigroup Inc. won a bid to block a $383 million arbitration case brought by Saudi businessman Ghazi Abbar.

U.S. District Judge Louis Stanton yesterday granted an injunction, at the end of a nine-day trial in Manhattan, blocking Abbar from arbitrating the case before the Financial Industry Regulatory Authority. Abbar claimed New York-based Citigroup Global Markets Inc. mishandled his family’s investments and said he had a right to arbitrate the claim before Finra.

Citigroup claimed Abbar was a client of Citigroup Global Markets Ltd., based in London, and therefore can’t force a Finra arbitration. Stanton, who said Abbar interacted with Citigroup divisions and offices in New York, London and Geneva in connection with his family’s investments, ruled that his account was with the London-based unit, not the New York unit.

“The entity in which the investor has his account, and from whom the investor purchases his desired product, defines the legal and business locus of his status as a customer, and is the core of the relationship as a customer,” Stanton said in his decision made public today.

“We are pleased with the decision,” Natalie Marin, a Citigroup spokeswoman, said today in an e-mail.

John G. Rich, a lawyer who represents Abbar in the case, didn’t immediately return voice-mail and e-mail messages seeking comment on the ruling.

Shifting Investments

In 2006, Abbar shifted his family’s investments to Citigroup as his private banker, Mohanned Noor, moved from Deutsche Bank to Citigroup Private Bank in Geneva, according to Stanton. A group of Abbar family trusts bought leveraged investments from Citigroup Global Markets Ltd. in London.

According to Stanton, Abbar worked with different Citigroup units, drawing little distinction among them.

“That arrangement was understood and in fact desired by Mr. Abbar,” Stanton said in his opinion. “He paid little attention to which Citgroup legal entity happened to employ the bankers working with him. He wanted his Swiss banker Noor ‘to be able to walk the corridors of the entire Citigroup.’”

Abbar, whose family made its fortune in Saudi Arabia from importing food and building businesses tied to tourism, aviation, oil, cold storage and ship fueling. He said in court filings that Citigroup persuaded him to invest his family’s money in complex derivative securities, losing the money when markets dropped in late 2008 after the collapse of Lehman Brothers Holdings Inc.

Citigroup said in court papers that Abbar is a sophisticated investor who understood the risks when he agreed to invest his family’s money.

The case is Citigroup Global Markets Inc. v. Abbar, 11-cv-06993, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at

To contact the editor responsible for this story: Michael Hytha at

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