Citi Hit With $54M Arbitration Award In Muni. Bond Hedge Fund Case

Apr 15 2011 | 1:23pm ET

Citigroup has lost another arbitration case over a series of municipal bond hedge funds it was forced to bail out during the financial crisis.

A Financial Industry Regulator Authority panel in Denver ordered Citi to pay three investors more than $54 million, including $17 million in compensatory damages. The investors, Gerald Hosier, his family office, Brush Creeek Capital, and Jerry Murdock, had accused the bank of misleading them about the risks of the MAT/ASTA hedge funds, which collapsed in 2008, costing investors some 80% of their money despite Citi's $1 billion infusion.

The panel's ruling is the 11th time in 13 tries that an investor in the MAT hedge funds has defeated Citi at arbitration, Securities Litigation and Consulting Group's Craig McCann told Reuters. But none of those previous losses has been as costly: The highest award granted until now was $6.4 million.

Citi said it was "disappointed" by the ruling and that it was considering its options.


In Depth

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...