Citigroup Affiliates to Pay $180 Million to Settle Hedge Fund Fraud Charges

Posted on August 27th, 2015 at 11:58 AM
Citigroup Affiliates to Pay $180 Million to Settle Hedge Fund Fraud Charges

From the Desk of Jim Eccleston at Eccleston Law LLC: 

Two Citigroup affiliates, Citigroup Global Markets Inc. (CGMI) and Citigroup Alternative Investments LLC (CAI), have agreed to pay nearly $180 million to settle charges that they defrauded investors in two hedge funds.

The ASTA/MAT Fund was a municipal arbitrage fund that purchased municipal bonds and used a Treasury or LIBOR swap to hedge interest rate risk.

The Falcon Fund was a multi-strategy fund that invested in ASTA/MAT and other fixed income strategies, such as CDOs, CLOs, and asset-backed securities.

The funds, both highly leveraged, were sold exclusively to advisory clients of Citigroup Private Bank or Smith Barney by financial advisers associated with CGMI. Both funds were managed by CAI. Neither Falcon nor ASTA/MAT was a low-risk investment.

According to the SEC, Citigroup affiliates made false and misleading representations to investors in those two hedge funds, which collectively raised nearly $3 billion in capital from approximately 4,000 investors before collapsing, without disclosing the real risks of the funds.

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston

Tags: Eccleston Law LLC, James Eccleston, eccleston, Eccleston Law, citigroup global markets, citigroup alternative investments,

Return to Archive



Thank you so very much for your guidance, patience, and expertise.

Beth and Steve K.


May 17, 2024
Fidelity Advisor Files Lawsuit Alleging Wrongful Termination Over Whistleblowing

A former Fidelity Investments advisor, Michael Maeker, has initiated legal action against his former firm, alleging wrongful termination in response to his reporting of anti-investor sales tactics.

May 16, 2024
CFTC Investigates Banks for Potential Whistleblower Suppression

The Commodity Futures Trading Commission (CFTC) has initiated inquiries into several banks, including JPMorgan Chase, Bank of America, and Citigroup, regarding potentially hindering whistleblowers from disclosing information, as reported by Bloomberg News.


May 15, 2024
NFA Issues Order Against Investments LLC

The National Futures Association's (NFA) Business Conduct Committee (BCC) has taken action against Investments LLC, a former NFA Member commodity pool operator and forex firm, for violating multiple NFA compliance rules.