Securities regulators have ordered Citigroup Inc. to pay $54 million to two investors who suffered hefty losses in several municipal bond hedge funds between 2002 and 2007.
An arbitration panel of the Financial Industry Regulatory Authority in Denver awarded the investors $34.1 million in compensatory damages and $17 million in punitive damages in an order signed Monday.
Investors Jerry Murdock Jr. and Gerald Hosier filed claims with regulators in June 2009 over their losses in the MAT Finance and ASTA Finance funds launched by Citigroup Global Markets Inc.
The investors’ attorney, Philip Aidikoff, says Citigroup marketed the funds as being of little more risk than municipal bonds, when in fact they were far more risky.
Citigroup said Tuesday it is disappointed with the decision and is reviewing its options.