Citi Muni Fund Is Hit With Class Action

Law360, New York (May 2, 2008, 12:00 AM EDT) -- A Citigroup hedge fund that used an arbitrage strategy involving high-yield municipal bonds has been targeted by a putative class action that claims the fund, which has sustained losses, failed to warn investors of the strategy's riskiness.

The complaint, filed Thursday in the U.S. District Court for the Southern District of New York, accuses the fund itself – MAT Five LLC – the fund manager and three Citi affiliates of committing federal securities fraud and breaching their fiduciary duties.

“We believe this suit is without merit,"...
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