Citi Sued Over Muni Hedge Fund

May 2 2008 | 11:44am ET

When it comes to its hedge funds, no news is good news for Citigroup. Unfortunately for the financial giant, today, there is news.

An investor in one of Citi’s MAT funds has sued the firm, alleging it lied about the nature of the fund when marketing it. The suit, filed yesterday in Manhattan federal court, seeks class-action status.

The Marie Raymond Revocable Trust accuses Citi of promising that MAT Five would “produce stable cash flows in a tax-advantaged arbitrage opportunity” by investing in high-quality, tax-exempt municipal bonds. But instead of receiving “a 7% to 8% yield, income tax free,” the lawsuit alleges that investors “have suffered the cessation of distributions and extreme loss in value of the shares.”

The suit alleges that marketing documents for MAT Five “were false and misleading in that the strategy to be employed would not protect investors.” Some hedge funds in the ASTA/MAT family have lost more than 90% of their value due to the credit crisis.

In March, Citi sought to prop up the ASTA/MAT funds with $1 billion in equity. Last month, the firm offered to cover some of the losses in the funds, provided investors agreed not to sue.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

Often seen as a passion project, or part of a philanthropic venture, rare and fine stringed instruments offer an exciting option to diversify one’s investment portfolio while providing an opportunity for an exceptional long-term investment.