FINRA Arbitrators Slap Citigroup with $6.4 Million Award

A Boca Raton, Florida Financial Industry Regulatory Authority (FINRA) arbitration panel ruled in favor of Claimants and ordered Citigroup Global Markets, Inc. (CGMI) and Citigroup Alternative Investments, LLC (CAI) to pay $6,379,021 in compensatory damages. The Claimants asserted various causes of action including fraud, breach of fiduciary duty, negligence and breach of contract, among others in their claim related to the purchase of shares of MAT Two LLC, MAT Three LLC and Mat Five LLC funds. These proprietary funds of Citigroup were created to engage in a fixed income strategy called municipal arbitrage. The funds were promoted and marketed as being safe, fixed income alternative investments offering a unique municipal bond opportunity. The funds imploded in 2008 resulting in losses of 70% to 97% to investors.

In addition to awarding the Claimants $6,379,021 in compensatory damages, the panel assesses $20,700 in forum fees against the Respondents, CGMI and CAI. Interestingly, the Presiding Chairperson did not agree with some aspect of the award and dissented, without making any comment as to the reason. (FINRA# 08-04466; D. Theodore Berghorst, Berghorst Snowbird, LLC, Berghorst 1998 Dynastic Trust, Deborah H. Berghorst, as Trustee of the Berghorst 1998 Dynastic Trust, Vector Managed Holdings, LLC v. Citigroup Global Markets, Inc. and Citigroup Alternative Investments, LLC).

If you have lost considerable money in these MAT/ASTA funds, please call for a confidential, no obligation consultation with our securities law firm at 1-800-259-9010.

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