Citigroup Ordered to Pay $2.4 Million for Municipal Arbitrage Loss

A Memphis, Tennessee FINRA arbitration panel hammered Citigroup for $2.4 million to be paid to investors for losses incurred in a municipal arbitrage fund that lost nearly 80% during the period between 2007 and 2008. (FINRA# 09-01796; Bertram E. Barnett, Jr. et al v. Citigroup Global Markets, Inc.)

The group of five investors was awarded $2,427,433 in compensatory damages related to investments in MAT Five, which was in a series of funds, MAT Finance LLC, short for municipal arbitrage trust. The SEC began looking into the funds that borrowed at low short term rates and invested in longer term bonds that paid higher rates magnifying the risk from even small changes in the bonds’ value, according to a Wall Street Journal report on November 8, 2010.

In addition to the compensatory damages, Citigroup was ordered to pay $19,200 in forum fees for the arbitration and $600 to the Claimants for the non- refundable portion of their FINRA filing fee.

If you have suffered losses from investments in municipal arbitrage funds, please contact our securities law firm for a confidential, no obligation consultation at 1-800-259-9010.

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