NEW YORK, Aug. 26, 2010 (GLOBE NEWSWIRE) -- A Financial Industry Regulatory Authority (FINRA) arbitration panel based in Los Angeles, has awarded more than $1 million in damages, plus interest, to investors represented by the law firms of Maddox Hargett & Caruso, P.C. and Aidikoff, Uhl & Bakhtiari in connection to fixed-income municipal arbitrage investments known as the MAT Three and MAT Five Funds.
The MAT Funds were proprietary leveraged municipal arbitrage hedge funds created and launched by Citigroup Global Markets, Inc. and sold through Smith Barney, part of Citigroup's (NYSE:C) Global Wealth Management Group, to high net worth clients of the firm. An identical municipal arbitrage product was marketed and sold to clients of the Citi Private Bank under the name ASTA. The funds imploded in February 2008 causing catastrophic losses to investors.
"Despite widespread evidence that Citigroup misrepresented MAT's risk level to its own brokers, who then passed the misleading information onto their clients, Citigroup elected to employ the 'blame the customer' defense," stated Steven B. Caruso of Maddox Hargett & Caruso, P.C., who served as co-counsel for the investors.
"This award provides yet another indication that arbitration panels recognize that even the most sophisticated investors are entitled to be treated fairly by their brokers and told the complete truth about their investments," Mr. Caruso added.
"The fund was represented by Citigroup to its brokers as a fixed-income alternative with the volatility of the Lehman Brothers Aggregate Bond Index," stated Ryan K. Bakhtiari of Aidikoff, Uhl & Bakhtiari, who served as co-counsel at the arbitration hearing. "In truth, evidence at the hearing demonstrated that the MAT products were risky investments and exposed investors to a 100 percent or more loss of principal," added Mr. Bakhtiari
The investors' legal team included the firms of Maddox Hargett & Caruso, P.C., of New York, New York and Indianapolis, Indiana, and Aidikoff Uhl & Bakhtiari, of Beverly Hills, California.
Both law firms continue to investigate and pursue FINRA arbitrations on behalf of investors who suffered losses in fixed income alternatives, including MAT and an affiliated municipal arbitrage fund marketed by Citigroup under the name ASTA.
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