Legal Update: Citigroup’s ASTA/MAT
For the past year, ASTA/MAT investors have been biding time as they wait for their arbitration claims against Citigroup to be heard. The focus of investors’ legal claims centers on a group of six hedge funds sold under the brand names of ASTA and MAT. Investors say Citigroup misrepresented the funds as safe, relatively low-risk investments.
Instead, the funds produced staggering financial losses for investors because of a highly risky investing strategy known as municipal bond arbitrage. When the credit and bond markets began to become unglued in the summer of 2007, ASTA/MAT plummeted in value.
As reported in a July 27 Wall Street Journal article, one series of Citigroup funds lost between 70% and 97% of their asset value by the end of February 2008. The funds were later given life support when Citigroup stepped in with more than $650 million of its own capital.
Recently, however, some ASTA/MAT investors and investors in similar funds have begun to see a light at the end of the tunnel. This month, a Financial Industry Regulatory Authority (FINRA) arbitration panel awarded a California family $2.1 million - the full amount of their losses on a $3 million investment in a municipal bond fund investment sponsored by First Republic Securities Co. (formerly owned by Merrill Lynch & Co.)
In May and June, three groups of investors in funds sold by Citigroup - the largest sponsor of such funds - won a total of $2.1 million in separate arbitration proceedings.
Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.
