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Citigroup Global Markets, Inc. Found Liable For Sale of Mat Three To Investors

A Los Angeles based Financial Industry Regulatory Authority (FINRA) arbitration panel awarded $550,504 to a married couple who are clients of Aidikoff, Uhl & Bakhtiari.  The award represents a return of 100 percent of the client’s losses as a result of their purchase of Mat Three.

Mat Three was a leveraged municipal arbitrage hedge fund launched by Citigroup Global Markets, Inc. and sold through Smith Barney, part of Citigroup’s (NYSE: CNews) Global Wealth Management Group in February 2006 and was marketed only to high net worth clients of the firm.  The fund imploded in February 2008 causing catastrophic losses to investors.

“Despite widespread evidence of material omissions, Citigroup elected to employ the “blame the customer” defense which the FINRA panel rejected.  The award is the second significant investor win in a Mat case for clients of our firm in the last 2 weeks,” 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 Three was a risky investment which subjected investors to a 100 percent or more loss of principal.”

The FINRA arbitrators also assessed the cost of the hearing against Citigroup Global Markets, Inc.