Thursday, 27 August 2015
Last updated 59 min ago
Apr 10 2008 | 7:35am ET
A Florida law firm has sued Citigroup for allegedly lying to investors about the risks in one of its hedge funds, and is seeking class-action status.
The suit, filed in federal court in Florida by West Palm Beach law firm Babbitt Johnson Osborne & Le Clainche, accuses Citi Alternative Investments of marketing its Falcon hedge fund strategies as low risk and low volatility to defraud investors through the funds’ “exorbitant fees.” Citi bailed out the Falcon strategies in February with a $500 million line of credit.
In particular, the potential class-action deals with the Falcon Strategies Two B fund, which lost more than 40% of its value. It covers any investors who put money into the fund between Sept. 30, 2005, and Jan. 8 of this year, when Standard & Poor’s changed its volatility rating from its second-lowest risk rating to its second-highest.
According to the suit, Citi moved the fund’s assets into a riskier strategy without informing investors.
May 27 2015 | 2:15pm ET
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