Citigroup Inc.—Misleading Investors over Hedge Fund Risk Allegations
Citigroup Inc. Allegedly Misled Investors Regarding the risks of Two Hedge Funds that Fell Apart in 2008
Citigroup Inc. and its brokers allegedly misled investors regarding the risks of two hedge funds that collapsed in 2008, according to statements from the SEC.
Citigroup’s alternative investment unit and brokers at Citi allegedly misrepresented the two funds, the Falcon Strategies Fund and ASTA/MAT funds, as low-risk, and as safe bond substitutes to advisory clients, despite the funds’ own marketing materials said they should not be used as bond substitutes, according to said SEC statements.
Citigroup Inc. Agreed to Pay $180 million Regarding Charges Related to Two Hedge Funds the SEC Alleges Were Improperly Marketed
Citigroup Inc. has agreed to pay $180 million to settle charges related to two hedge funds that the SEC said were improperly marketed and sold by private bankers and Smith Barney brokers in the run-up to the financial crisis.
Citigroup, from 2002 to 2007, raised almost $3 billion from approximately 4,000 investors in both funds, which later led to billions of dollars in losses when the funds collapsed in 2008, according to the SEC.
In one example, Citigroup Private Bank had an internal risk rating that was aware the funds had “significant risk to principal,” but that rating was never shared with the majority of investors and financial advisers, according to the SEC
The Peiffer Wolf Securities Lawyers Often Aid and Assist Investors
The Peiffer Wolf securities lawyers are assisting investors who lose money as a result of hedge fund schemes. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Investors who believe they lost money as a result of hedge fund schemes are encouraged to contact the securities lawyers at Peiffer Wolf, Jason Kane or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 585-310-5140.