Citigroup affiliates agree to Repay $179.5 Million After misleading Hedge Fund buyers

August 17, 2015

Two Citigroup Inc. associates have agreed to pay $ 179.5 million after being charged by federal regulators for misleading traders in hedge cash that later collapsed.

On Monday, the Securities and alternate fee (SEC) introduced the settlement with Citigroup various Investments, a subsidiary of the bank, and Citigroup international Markets, an affiliated firm. The affiliates pays $ 139.9 million plus $ 39.6 million in interest. the money will be again to traders in two hedge cash managed by way of the firms.

both companies as part of the settlement, do not have to confess any wrongdoing. each companies did promise to refrain from future violations of securities regulations. the firms also had been censured, bringing the potential of a stiffer sanction if the alleged violation is repeated.

each companies offered securities in two hedge money from 2002 to 2007, elevating virtually $ 3 billion from largely rich investors or establishments. Representatives instructed traders that their money was safe in low-possibility cash that had been just like bonds. In 2008 the hedge dollars collapsed following the beginning of the recession. The associates misplaced billions of dollars for their traders.

The contract states that the funds supervisor failed to reveal “very real risks” of the funds. Managers on the money additionally provided verbal comments that straight away conflicted with fund marketing materials.

The fund managers “falsely assured them they have been making protected investments even when the dollars have been on the point of catastrophe,” SEC Enforcement Director Andrew Ceresney said in a commentary.

ny-primarily based Citigroup stated in a commentary that it was pleased to have resolved the subject.

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