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.

J.P. Morgan Securities, Inc. is a FINRA registered broker-dealer based in New York City . J.P. Morgan Securities acquired Bear Stearns in May 2008.

Bear Stearns/J.P. Morgan Securities’ failure to supervise its financial advisors with respect to the sale of hedge fund investments to retail customers is particularly troubling. Hedge funds are only appropriate for high net worth, sophisticated investors. As such, Bear Stearns failure to disclose the risks of these investments to its customers was a compete derogation of its duties to its customers. Also, hedge funds are not regulated in the ways that mutual funds or other investments are. Accordingly, the risk of fraud, unsuitability, etc., is greater with a hedge fund investment than it is with other, more suitable investments, like mutual funds, or bonds.

If you have questions about investments you made with Bearn Stearns or in a hedge fund, or if you believe that you have been the victim of a securities fraud, the Law Offices of David A. Carter, P.A. may be able to help. The Law Offices of David A. Carter, P.A. is a South Florida securities fraud, securities arbitration, investor protection, and Chapter 7 bankruptcy law firm based in Boca Raton. David Carter is a securities attorney that reviews securities fraud cases throughout the country and Florida, including securities cases in Orlando, Jacksonville, Tampa, Tallahassee, Gainesville, Ocala, Sarasota, Bradenton and West Palm Beach. To contact the Law Offices of David A. Carter, P.A., please call 561-750-6999, or email us at contact@carterpa.com. For more information about the Law Offices of David A. Carter, P.A., you can also visit our website at www.carterpa.com.