August 10, 2010 Comments (0) Blog, Securities Fraud

Investigation Into Possible Securities Fraud Involving Citigroup's ASTA and MAT funds

(Last Updated On: July 17, 2015)

The White Law Group is investigating securities fraud claims on behalf of investors with investment losses in Citigroup’s ASTA and MAT 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.

Essentially these funds operated by borrowing money by issuing tax-exempt commercial paper, then used the cash to buy municipal bonds that had 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.

Citigroup’s ASTA and MAT funds had total assets worth about $15 billion, with about $2 billion in capital.

By the end of 2007, the trading scheme employed in these funds was failing. The reason was that the market downturn was hammering municipal bond yields, while the yield on taxable bonds rallied substantially. Smith Barney sold the funds as low-to-moderate risk, low-volatility funds and omitted to disclose the extreme risks associated with the investments.

If you have any information that may assist The White Law Group in its investigation into these funds, please contact the firm’s Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions. For more information on The White Law Group, please visit the firm’s website at http://www.whitesecuritieslaw.com.

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