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 Rosca Wolf Securities Lawyers Often Aid and Assist Investors

The Peiffer Rosca 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 Rosca Wolf, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1180 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.