Notice to All Investors of Citigroup’s ASTA/MAT, Falcon
Strategies and CSO Partners Funds From the Securities Law
Firm of Klayman & Toskes
NEW YORK, May 1, 2008 (Lawfuel) — The Securities Law Firm of
Klayman & Toskes, P.A. (“K&T”) (http://www.nasd-law.com) announced
today that it is continuing its investigation of the trading practices
and supervision by Citigroup (NYSE:C) in several of its funds,
ASTA/MAT, Falcon Strategies and CSO Partners (“CSO”). Additionally, the
firm is filing securities arbitration claims on behalf of individuals
who lost money in these funds.
Investors in Citigroup’s ASTA and MAT funds have reported that they
have sustained heavy losses. To date, the ASTA and MAT funds have lost
about 90% of their original value. Citigroup began offering the ASTA
and MAT funds to its customers in 2002 to Smith Barney brokerage
clients and private bank customers with more than $5 million in liquid
assets. Citigroup represented these funds to be “safe,” “secure” and
ideal for retirees, as they would provide guaranteed income. With these
representations, customers flocked to the funds, investing hundreds of
millions of dollars.
The ASTA and MAT funds are essentially two Trusts run by Citigroup. The
brokerage firm generated money in the funds by issuing tax-exempt
commercial paper and then used the cash to buy municipal bonds that
provided higher yields, thereby generating a profit. The funds then
hedged against movement in interest rates by essentially reversing that
trade, using taxable securities. To bolster returns, the funds were
leveraged. Citigroup fund managers then bought the riskiest piece of
the bonds issued by the funds. The funds performed well until the
credit crunch hit last summer. When that occurred, the ASTA and MAT
funds began to fail. As the funds were losing value, Reaz Islam, the
manager of the funds, assured brokers and customers that the funds
would rebound in value. This only allowed the bleeding to continue, and
caused investors to lose even more money.
Klayman & Toskes has also been contacted by investors of Citigroup’s
CSO Fund. In the wake of heavy investment losses, Citigroup spokesman
Jon Diat announced that the firm has “temporarily suspended redemptions
of all shares of CSO to stabilize the fund.” The Wall Street Journal
reported that CSO ran into trouble last November, when it sought to
invest a sizeable amount of its assets in a German media company. John
Pickett, the manager of CSO, later tried to back out of the deal, but
ultimately CSO was forced to buy the debt at face value even though it
was trading at about 90 cents on the dollar by that time, The Journal
reported. John Pickett has resigned from Citigroup since the deal went
bad.
Finally, Citigroup’s Falcon Strategies fund lost almost 53% in the
fourth quarter of 2007, and is now down about 75% overall. The losses
have been largely attributed to the fund betting on mortgage-backed and
preferred securities and making trades based on the relative values of
municipal bonds and U.S. Treasuries. Some Collateralized Debt
Obligations (“CDOs”) in the Fund are now worth 25% of their original
value.
If you are an investor of Citigroup’s ASTA/MAT, Falcon Strategies or
CSO Partners Funds, and wish to explore your legal options, or if you
have information relevant to our investigation, please contact Steven
D. Toskes, Esquire or Jahan K. Manasseh, Esquire of Klayman & Toskes,
P.A., at 888-997-9956. You may also visit us on the web at
http://www.nasd-law.com.
Klayman & Toskes, P.A., an experienced and nationally recognized
securities litigation law firm, continues its representation of
investors throughout the world in securities arbitration and litigation
matters against major Wall Street brokerage firms.
