The ASTA/MAT municipal bond funds were run by Reaz Islam, who said in a 2012 Bloomberg News interview that investors knew how volatile they were and that the strategies no longer worked after the markets turned. The funds were sold to investors by Citigroup’s financial advisers, who worked for the firm’s former Smith Barney wealth management unit.
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The ASTA/MAT fund bought municipal bonds issued by US state and local government entities and used treasury or LIBOR swaps to hedge interest rates. The funds later crumbled and eventually collapsed during the financial crisis. Both funds were managed by CAI. Citi Alternative Investor Services clients can be assured of SS&C’s commitment to continue to serve them with world class people, process and technology. The associate affiliates of Citigroup have forced investors to invest, even though the funds were classified as possessing significant risk to capital. The SEC noted that numerous misleading claims made by Citigroup employees were at odds with disclosures in marketing documents and written materials provided to investors.
By January 2008, Falcon’s fund manager had drawn up potential “liquidation scenarios” for the fund. Yet the fund manager and some financial advisers continued to tell investors that Falcon had “adequate liquidity” and that the fund was “well capitalized”, the regulator said. Despite agreeing to pay the settlement, both CAI, as well as, CGMI failed to admit committing any wrong doings by them during the regulator’s investigation.
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Citigroup Inc. agreed to sell its Alternative Investor Services business to SS&C Technologies Holdings Inc., a provider of software and investment services to the finance industry, for about $425 million.
