By Marcy Gordon
AP Business Writer
WASHINGTON (AP) — Two Citigroup Inc. affiliates have agreed to pay $179.5 million to resolve federal regulators’ charges of misleading investors in hedge funds that later collapsed.
The Securities and Exchange Commission announced Monday the settlement with Citigroup Alternative Investments, a subsidiary of the bank, and Citigroup Global Markets, an affiliated company. The amount they are paying, $139.9 million plus $39.6 million in interest, will be returned to investors in two hedge funds managed by the firms.
The two firms neither admitted nor denied wrongdoing but did agree to refrain from future violations of securities laws. The firms also were censured, bringing the possibility of a stiffer sanction if the alleged violation is repeated.
The SEC said the firms sold securities in two hedge funds from 2002 to 2007, raising nearly $3 billion from mostly wealthy investors or institutions. The agency says the fund managers falsely told prospective investors they were low-risk and similar to bonds.
The hedge funds collapsed in 2008 during the financial crisis, sustaining billions of dollars in losses.
In talking to prospective investors, the fund managers failed to disclose the “very real risks” of the funds, the SEC said. Many of the managers’ verbal statements to investors conflicted with the disclosures in fund marketing materials, according to the agency.
The fund managers “falsely assured them they were making safe investments even when the funds were on the brink of disaster,” SEC Enforcement Director Andrew Ceresney said in a statement.
New York-based Citigroup said in a statement that it was pleased to have resolved the matter. Citigroup has said previously that the attorneys general of Massachusetts and New York also have investigated the management and marketing of the funds.
————————
AP Business Writer Marley Jay in New York contributed to this report.
- Posted August 19, 2015
- Tweet This | Share on Facebook
Citigroup affiliates paying to resolve SEC case
headlines Oakland County
- Associations gather for Spring Fling
- Supreme Court denies rehearing request by attorneys sanctioned for meritless election lawsuit
- Law school conducts ‘Know Your Rights Day’ for high school students
- Oakland County household hazardous waste dropoff events promote environmental stewardship and safeguard communities
- Nessel testifies in support of BRITE Act
headlines National
- Incarceration series includes female inmates but doesn’t tell full story
- ACLU and BigLaw firm use ‘Orange is the New Black’ in hashtag effort to promote NY jail reform
- Former DOJ official who alleged election fraud violated at least one ethics rule, ethics committee says
- Winston & Strawn will provide reduced-cost legal services for routine tasks under Winston Legal Solutions umbrella
- Should Justice Sotomayor retire? Chemerinsky, White House haven’t joined calls for her to step down
- Which BigLaw firms are increasing lateral associate hiring the most? One made legal headlines last year