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Category Archives: Mat/Asta

Mat/ASTA Case Brings $54 Million Award For Investors

A highly leveraged municipal arbitrage fund known as Mat/ASTA has come back to haunt its creator, Citigroup Global Markets. On April 11, a Denver, Colorado-based Financial Industry Regulatory Authority (FINRA) arbitration panel awarded more than $54 million to two clients represented by the laws firms of Aidikoff, Uhl & Bakhtiari and Maddox, Hargett & Caruso.

The award includes punitive damages of $17 million and $3 million in attorney fees. The arbitration panel also assessed the entire cost of the arbitration hearing against Citigroup Global Markets, ordering the firm to pay $33,500 in expert witness fees and $13,168 in court reporter costs.

“This award demonstrates that even the most sophisticated investors were misled by Citi in the marketing and sale of the Mat and ASTA leveraged municipal arbitrage product,” said Steven B. Caruso of Maddox, Hargett & Caruso.

“The fact that the arbitrators also awarded expert witness costs, court reporter costs and all FINRA forum fees is both unusual and important,” Caruso added.

The Mat/ASTA fund was sold through Smith Barney and Citigroup Private Bank to high net worth clients between 2002 and 2007. According to investors, the returns and risks of the funds were represented as “slightly greater” than a typical municipal-bond portfolio.

In reality, the Mat/ASTA funds were highly leveraged, borrowing approximately $8 for every $1 raised.

“Citi misrepresented the known risks of Mat/ASTA to retail investors such as the claimants in this case,” said Dr. Craig McCann of Securities Litigation and Consulting Group. McCann served as an expert witness for the claimants.

Maddox, Hargett & Caruso continues to investigate FINRA arbitration claims on behalf of investors who suffered financial losses in leveraged municipal arbitrage investments, including Mat/ASTA.


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