Arbitrator Finds Against Citi In Municipal Bond Hedge Fund Case

Aug 11 2010 | 9:44am ET

Citigroup may be facing an avalanche of lawsuits over a series of hedge funds it bailed out two years ago after an arbitrator awarded a pair of investors $1.8 million.

The Financial Industry Regulatory Authority panel found that Citigroup Global Markets and Citi Alternative Investments negligently mismanaged the MAT/ASTA funds and negligently supervised employees, the Law Offices of Robert Wayne Pearce and Page Perry said. The two law firms have now teamed up to represent other clients of the municipal bond hedge funds, and they are not alone in that endeavor.

“Citigroup sold these products like tickets on the Titanic and, with this ruling, they're going to pay their victims whose investments they sunk,” Robert Pearce said. “Citigroup tried the 'blame the customer defense,' but blaming the customer does not make sense for Citigroup's failing to follow its own investment strategy and then sailing MAT/ASTA directly into the storm it saw on the horizon. The negligent management claim now is available to all MAT/ASTA investors, including employees not involved in the management of the funds.”

The $1.8 million award follows a $550,000 award made by a FINRA panel in June.

Investors say the MAT/ASTA funds were marketed as relatively safe, fixed-income products. But Pearce said that they “were risky investments that exposed investors to a 100% or more loss of principal.”

Pearce and Page Perry aren’t the only firms seeking to drum up clients against Citi. The Securities Law Firm of Klayman & Toskes issued a press release yesterday to “all Smith Barney/Citi Private Bank customers who invested in ASTA and MAT funds,” offering their services and promising to “aggressively” pursue claims for MAT/ASTA clients.


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of