Securities Arbitration Orders Citigroup to Pay $51 Million
Thursday, April, 14, 2011
Due to a securities arbitration decision, some investors are slated to receive more than $51 million from Citigroup, the third largest bank in the United States. The decision was reached via arbitration conducted by the Financial Industry Regulatory Authority, which serves as a watchdog organization for brokerage houses in the nation. $17 million of the award consists of punitive damages.
Not all Citigroup investors are included in the award; it is limited specifically to those who put money into two municipal bond hedge funds at Citigroup: MAT and ASTA. Regulators have been investigating these funds for over two years. A representative of Citigroup, Danielle Romero-Apsilos, announced via email that the firm was "disappointed with the decision," claiming that it was "not supported by the facts or law.” She added that Citigroup is now examining its options.
Securities Arbitration not Completely Transparent (In This Case)
The arbitration announcement included financial details, but lacked detailed justifications for the amounts in question. At issue were accusations of misconduct by Citigroup, including fraud, contract violations, and breach of fiduciary responsibilities. Gerald Hosier, a patent attorney, is slated to receive $21.7 million, while the firm owned by his family, Brush Creek Capital LLC, was awarded $8.5 million. Jerry Murdock Jr., a venture capitalist, should receive $3.9 million. An additional $3 million was awarded for legal fees.