HOUSTON, July 2, 2008 (PRIME NEWSWIRE) -- The securities law firm of Shepherd Smith Edwards & Kantas, LLP (http://www.sseklaw.com) announced today that it is investigating claims on behalf of investors who suffered losses in hedge funds sold by Citigroup's Smith Barney brokerage unit. The funds at issue, Falcon and ASTA/MAT, were allegedly recommended by brokers for Citigroup and Smith Barney to investors seeking conservative investments. Investors say they were told that the funds were low-risk, safe places to place cash, with only a minimal probability of sustaining losses. In reality, these funds may have carried tremendous levels of risk that went undisclosed to investors.
The Falcon funds invested primarily in fixed-income securities such as municipal bonds, mortgage-backed securities, bank loans and other debt instruments. The ASTA/MAT funds were invested similarly. As a result, the funds may have been dangerously exposed to weakness in the credit, mortgage and bond markets.
According to a report by the Wall Street Journal, "Citigroup brokers and fund managers assured prospective investors that the new hedge funds were low-risk." The Falcon fund in particular was represented as "likely to post losses of no more than 5% a year in the worst-case scenario." Notwithstanding the representations of safety and low risk made to investors, these hedge funds have lost an estimated 75% of their value in the last year.
In February 2008, Citigroup disclosed in a regulatory filing with the SEC that it provided a $500 million line of credit to the Falcon funds, and later announced it would consolidate the funds' $10 billion in assets and liabilities on its own balance sheet. Since then, Citigroup has attempted to appease aggrieved investors by offering to reimburse them a percentage of their losses. Of course, investors who accept Citigroup's offer waive the right to sue the company for the rest of their losses. Investors who have lost money invested in these hedge funds should contact an attorney to discuss their legal rights.
Shepherd Smith Edwards & Kantas LLP has a team of attorneys, consultants and others with more than 100 years of combined securities industry and legal experience. Since 1990, we have represented thousands of investors, both individual and institutional, nationwide in Federal and state courts and in arbitration through the Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange Inc. (NYSE) and the American Arbitration Association (AAA).
If you have suffered securities investment losses, please contact Shepherd Smith Edwards & Kantas LLP at 1-800-259-9010 for a free case evaluation. You may also visit Shepherd Smith Edwards & Kantas LLP on the web at www.sseklaw.com.