Citigroup misled its representatives who sold the firm’s MAT/ASTA municipal arbitrage hedge funds, and arbitrators are placing the blame squarely on the firm, according to a September 5 article by Bruce Kelly in Investment News (“Arbitrators: B-Ds Kept Brokers in the Dark on Private Deals”).
Brokers at Citigroup’s former brokerage unit, Smith Barney, sold more than $2 billion of the MAT/ASTA funds as low-risk, fixed-in-come alternative investments, beginning in 2002. Those funds lost between 30% and 100% of their value, according to the article.
Last month, a Financial Industry Regulatory Authority (“FINRA”) arbitration panel specifically found that Citigroup Global Markets Inc. was liable for “negligent management” of the MAT/ASTA funds, and ordered the firm to pay $1.82 million in damages.
The arbitrators’ finding of mismanagement by Citigroup is an indication of the severity of the problem at that firm, according to attorney Robert Pearce, who represented the client in that claim.
“There are tons of conflicts in these products and how they’re offered,” Mr. Pearce was quoted as saying, adding: “The financial advisers are the tools to sell these products, and they don’t get the full scoop on who’s managing them. The blow-up was due to management, who then passed it along to the advisers.”
“The best advisers at Smith Barney sold MAT and ASTA to their best clients and wound up feeling totally betrayed by Smith Barney,” an industry recruiter was quoted as saying, adding: “in terms of a loss of faith in the firm, this is as big as anything.”
The financial advisors who sold MAT/ASTA Funds to their clients trusted Citigroup to honestly inform them about the nature and risks of the funds and to manage the funds within established guidelines.
That trust was betrayed. Based on our analyses and evaluations of the facts, we have made a conscious decision not to name financial advisors in these cases. The brokers will not be named in MAT/ASTA arbitrations filed by our law firm.
A PRUDENT CASE APPROACH
Mr. Pearce, a former SEC attorney with over 40 years experience, focuses his practice on securities matters.
He is a member of the Public Investors Arbitration Bar Association and serves as Chairperson of the SPBCBA Securities Committee.
Mr. Pearce has represented hundreds of investors in securities arbitration and have prosecuted multiple MAT/ASTA arbitration claims.
He is currently representing almost 50 clients throughout the country in MAT/ASTA cases.
The Law Offices of Robert Wayne Pearce, P.A. follows a multi‑theory approach encompassing three separate bases for recovery, depending on the facts and circumstances of the particular investor’s case.
These include: (1) MAT/ASTA was a flawed investment product; (2) Citigroup and its affiliates misrepresented and failed to disclose material facts at the time the investor was sold the investment; and (3) Citigroup and its affiliates were guilty of negligent mismanagement of MAT/ASTA and negligent supervision of their employees.
We believe that this approach gives investors three separate bases for recovering damages and enhances the likelihood of an award. We prefer not to put all of our clients’ “eggs in one basket.”
If you are seeking a law firm with integrity, dedication, and substantial experience in MAT/ASTA fraud and mismanagement disputes, please schedule a confidential consultation with Mr. Pearce today.
Call our firm at 561-338-0037 or toll-free at 800-732-2889, or fill out our intake form to schedule your free consultation.
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