The Citigroup manager behind failed fixed-income alternative funds known as ASTA/MAT apparently is moving on with his life after the funds collapsed and left thousands of investors financially ruined.
As reported March 13 by Bloomberg, Reaz Islam ran the ASTA/MAT funds, which lost some 90% of their value in 2008. Since then, Citigroup has been the focus of a string of securities investigations, as well as lawsuits and arbitration claims filed by investors who contend the funds were marketed and sold to them as a safe, less risky and more profitable alternative than other fixed-income and municipal investments.
In reality, the ASTA/MAT funds were highly leveraged, borrowing approximately $10 for every $1 raised. Meanwhile, the managers of ASTA/MAT continued to invest in some of the most risky and speculative investment strategies possible. By February 2008, the funds had lost more than 90% of their value.
On April 11, 2011, an arbitration panel of the Financial Industry Regulatory Authority (FINRA) ordered Citigroup to pay a record $54 million to investors who suffered losses in ASTA/MAT and several other purported fixed income-related products. Investors in the case were jointly represented at the hearing by Steven B. Caruso of the New York City office of Maddox, Hargett & Caruso, P.C. and Philip M. Aidikoff & Ryan K. Bakhtiari of the Beverly Hills, California, office of Aidikoff, Uhl & Bakhtiari.
The ruling included an assessment against Citigroup of $17 million in punitive damages, following allegations that Citigroup misled investors about the risks of the funds. The award is one of the largest arbitration awards ever recovered on behalf of individual investors, according to FINRA.
Meanwhile, Islam, who gave an interview to Bloomberg following a four-year silence on the ASTA/MAT matter, is now a managing partner with LR Global Partners LP. According to its corporate Web site, LR Global is a New York-based investment firm with operations in Bangladesh, Singapore,Vietnam and Sri Lanka.
As for Citigroup, the fallout from ASTA/MAT isn’t over. Arbitration claims for more than 69 households are still pending before FINRA for investors who are jointly represented by Maddox Hargett & Caruso, P.C. and Aidikoff, Uhl & Bakhtiari.