Citi Fined In Cemetery Hedge Fund Case

May 28 2010 | 10:09am ET

Citigroup has agreed to pay $1.5 million to settle charges that its supervisory failures allowed one of its brokers and two customers to misappropriate some $60 million in cemetery trust fund money, including hedge fund investments.

Under the scheme, Smith Barney broker Mark Singer arranged to have Clayton Smart buy 28 cemeteries in Michigan from Craig Bush, using $28 million improperly transferred from the cemeteries’ trust funds to Smart. Smart then used more of the trust fund money to buy cemeteries and funeral homes in Tennessee as part of a scheme that ran from 2004 through 2006, according to the Financial Industry Regulatory Authority.

Citi was rapped for missing a veritable forest of red flags, including in February 2005, when it learned that Smart might be misrepresenting his acquisition of hedge fund investments owned by the Michigan cemetery trusts, using that investment as collateral for a $24 million credit line from Citigroup Private Bank.

Both Smart and Singer have been charged criminally; the latter is awaiting a second trial in Tennessee after the first ended in a mistrial.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR