NEW YORK, May 13, 2010 (GLOBE NEWSWIRE) -- A Financial Industry Regulatory Authority (FINRA) arbitration panel, based in Los Angeles, has awarded more than $1.7 million to investors represented by the law firms of Maddox Hargett & Caruso, P.C. and Aidikoff Uhl & Bakhtiari in connection with their purchase of a fixed income municipal arbitrage investment that was known as MAT Five.
MAT Five was a proprietary leveraged municipal arbitrage hedge fund that was created and launched by Citigroup Global Markets, Inc. and sold through Smith Barney, part of Citigroup's (NYSE:C) Global Wealth Management Group, in February 2007 to only high net worth clients of the firm. The fund imploded one year later causing catastrophic losses to investors.
Despite widespread evidence of material omissions and misrepresentations, Citigroup elected to employ the "blame the customer" defense, stated Steven B. Caruso, which the panel rejected. When confronted with evidence that Citigroup misrepresented MAT's risk level to its brokers, who then passed the misleading information on to their clients, a high ranking Citigroup official testified that it was "unwise" for customers of the firm to have relied on what their brokers had told them about an investment that had been recommended by the firm.
"This award represents a return of our clients' losses plus interest and is the first significant investor win in a MAT case," according to Philip M. Aidikoff.
"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, who added, "In truth, evidence at the hearing demonstrated that MAT Five was a risky investment that not only exposed investors to a 100 percent or more loss of principal, but was 2.5 times more volatile than the S&P 500 and 7.8 times more volatile than a traditional portfolio of municipal bonds. This was not consistent with what our clients had been told by their brokers."
The FINRA arbitrators also assessed the entire cost of the hearing against Citigroup Global Markets, Inc.
The investors' legal team includes the firms of Maddox Hargett & Caruso, P.C., of New York, New York and Indianapolis, Indiana; Aidikoff Uhl & Bakhtiari, of Beverly Hills, California; Page Perry, LLC, of Atlanta, Georgia; and David P. Meyer & Associates Co., L.P.A., of Columbus, Ohio.
The law firms continue to investigate and pursue FINRA arbitrations on behalf of investors who suffered losses in fixed income alternatives, including Mat/ASTA.
More information is available by contacting an attorney below.