Citigroup MAT Five Class Action Opt-Out Deadline Dec. 5

Many investors who are eligible to participate in the Citigroup MAT Five class action lawsuit are electing to opt-out of the settlement and pursue individual FINRA arbitration claims. Financial fraud lawyers who are reviewing potential claims have suggested that arbitration may provide most investors a better opportunity to recover their losses, but the deadline to opt-out of the settlement is rapidly approaching on December 5, 2008.

MAT Five is a hedge fund managed by Citigroup Alternative Investments. It was marketed to high net worth investors, most of whom were retired, as a relatively conservative investment. However, since its inception, the fund has lost about 90% of its value.

The Citigroup MAT Five class action lawsuit was filed on behalf of all investors, alleging that false and misleading statements were made about the level of risk associated with the investment.

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Citigroup marketed the fund as a fixed income product that could provide higher yields in a secure investment. They claimed that the fund would not be subject to a significant amount of volatility, which made it attractive to older investors.

The MAT Five lawsuit claims that investors were not warned about the strategy that fund managers would employ, and that steps were not taken to prevent managers of the MAT Five Hedge Fund from making risky and speculative investments.

On March 20, 2008, Citigroup sent a letter notifying investors that the fund’s income distribution would be suspended indefinitely. While Citigroup has offered to redeem shares held by investors, the offers are at considerably lower values than what the average investor paid to purchase them.

Investors have until December 5, 2008 to opt out of the settlement for the Citigroup MAT Five lawsuit and pursue their own individual arbitration claim through the Financial Industry Regulatory Authority, commonly referred to as FINRA.

FINRA oversees nearly 5,000 brokerage firms throughout the United States, and most broker agreements require that individual disputes be resolved through arbitration.

Generally, arbitration panels are comprised of attorneys, accountants, retired judges, bankers, brokers and other professions. The panels are designed to favor the investor, as usually only one of the arbitrators is an industry person.

When presented with an option between pursuing recovery of investment losses through a class action lawsuit or individual arbitration claim, many law firms that handle securities fraud recommend investors review a potential arbitration claim, which could place them in a better position to recover more of their losses.

Any investors who do not elect to opt-out of the class action settlement by December 5, 2008, will be bound by the agreement which provides for an exchange of their interests at an unspecified “Net Asset Value” plus five cents.

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1 Comments

  • RobertOctober 27, 2009 at 4:32 am

    my Investor mismanaged my money witch caused him to lose a great deal of my retirement.

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