A recent front-page Wall Street Journal entitled “Citi Debt Funds Probed by SEC,” which concerns Citi’s disastrous MAT/ASTA municipal arbitrage fund, features a highly significant $1.8 million award issued against Citigroup in a MAT/ASTA case by a Financial Industry Regulatory Authority (FINRA) arbitration panel.
The case is Gerald J. Kazma Revocable Trust and Amzak Capital Management, LLC vs. Citigroup Global Markets, Inc. f/k/a Citigroup Investment Services, and Citigroup Alternative Investments, LLC, Case No. 09-02697.
The Kazma family was represented by Robert Pearce of Boca Raton, Florida.
Mr. Pearce attributes his success in the Kazma arbitration to an intensive two year investigation and access to millions of pages of documents produced by Citigroup to the SEC in the probe.
The WSJ reported:
In Miami, Gerald Kazma, a retired cable-TV system developer, invested $4 million in MAT funds in early 2006. According to an arbitration claim he later filed, a Citigroup private banker had told him the return and risk were “slightly greater” than a typical municipal-bond portfolio. Citigroup told the securities-industry arbitration panel the funds’ risks were disclosed to Mr. Kazma.
The panel this year awarded Mr. Kazma $1.8 million, two-thirds of his loss, citing “negligent management and negligent supervision” by Citigroup. Three other investors have won a total of $2.1 million from Citigroup in arbitrations this year.
The Kazma case is significant because the arbitrators found that Citigroup and Citigroup Alternative Investments, LLC negligently mismanaged the MAT/ASTA funds and negligently supervised their employees.
Because Citigroup’s mismanagement of MAT/ASTA began during 2006 through 2007 and continued through early 2008, even early investors in the funds are now eligible to pursue their claims.
Thus, claims based on mismanagement and negligent supervision in 2006 and 2007 remain actionable under the laws of most states.
The impact of the decision is that it greatly expands the number of potential clients who can pursue valid claims against Citigroup and its affiliates.
The Kazma award also strongly suggests that any MAT/ASTA investor, even a Citigroup employee who had no involvement with the funds, can file a claim for negligent management and may well recover his losses.
Mr. Pearce along with Page Perry law firm in Atlanta, Georgia are prosecuting many other MAT/ASTA fund cases and accepting new clients.
A PRUDENT CASE APPROACH
Mr. Pearce, a former SEC attorney with over 40 years experience, focuses his practice on securities matters.
He is a member of the Public Investors Arbitration Bar Association and serves as Chairperson of the SPBCBA Securities Committee.
Mr. Pearce has represented hundreds of investors in securities arbitration and have prosecuted multiple MAT/ASTA arbitration claims.
He is currently representing almost 50 clients throughout the country in MAT/ASTA cases.
The Law Offices of Robert Wayne Pearce, P.A. follows a multi‑theory approach encompassing three separate bases for recovery, depending on the facts and circumstances of the particular investor’s case.
These include: (1) MAT/ASTA was a flawed investment product; (2) Citigroup and its affiliates misrepresented and failed to disclose material facts at the time the investor was sold the investment; and (3) Citigroup and its affiliates were guilty of negligent mismanagement of MAT/ASTA and negligent supervision of their employees.
We believe that this approach gives investors three separate bases for recovering damages and enhances the likelihood of an award. We prefer not to put all of our clients’ “eggs in one basket.”
FREE CONSULTATION WITH ATTORNEYS WHO CAN HANDLE YOUR SECURITIES AND COMMODITIES PROBLEMS
Contact The Law Offices of Robert Wayne Pearce, P.A., in Boca Raton to discuss your MAT / ASTA claim.
The firm can be reached by phone at 561-338-0037, toll free at 800-732-2889 or via e-mail.