Did you invest in Citgiroup Alternative Investments known as MAT or ASTA Funds?
This information is for investors who opted out of the MAT Five class action by December 5, 2008, or investors in the ASTA funds. Citigroup began offering the ASTA and MAT funds in 2002 to Smith Barney brokerage clients and private bank customers with more than $5 million in liquid assets. For years, the bank had invested its funds using a similar trading strategy. Trusts run by Citigroup and other financial institutions borrowed money by issuing tax-exempt commercial paper, then used the cash to buy municipal bonds that have slightly higher yields, pocketing the difference. The trusts then hedged against big swings in interest rates by essentially reversing that trade, using taxable securities. And to bolster returns, they piled on leverage. Citigroup fund managers then bought the riskiest piece of the bonds issued by the trust.
By the end of 2007, that trading scheme was failing; and by March, 2008 it was essentially a failed venture. The reason was that the market downturn was hammering municipal bond yields, while the yield on taxable bonds rallied substantially. With the hedges on the trades hemorrhaging money, some of the funds' half-dozen lenders, including Citigroup, became worried and issued margin calls.
Although marketed as relatively safe fixed income investments, these were actually very risky investments which could drop precipitously if the markets changed, or if the investment were not properly managed.
It has been alleged that Citigroup has falsified and misrepresented their Private Placement Memorandum, which essentially lead investors to invest in this risky fund without knowing that is was in actuality a risky fund. After the credit crunch occurred, the cash positions and net asset values of the MAT Five fund has been severely and negatively impacted. Investors of the MAT five funds had no idea why this had occurred and were left with a substantial loss to their investments.
Sonn | Erez is currently representing investors in MAT Five and ASTA Funds and is conducting an investigation into the sale of MAT Five and ASTA funds
If you have information or wish to discuss your rights as an investor, contact us at 1-866-FRAUD-11 or contact Jeff Sonn, Esq. at jsonn@sonnerez.com or Jeff Erez at jerez@sonnerez.com, or Stefan Apotheker at sapotheker@sonnerez.com.
