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Citigroup Affiliates to Pay $180 Million to Settle Hedge Fund Fraud Charges

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posted on Aug, 19 2015 @ 10:16 AM
If this doesn't make your blood boil, then you be dead. Citigroup pays $180 million to settle charges for defrauding Investors after raking in nearly $3 Billion. What damn good is the SEC, Answer, NO Good.

Washington D.C., Aug. 17, 2015 — The Securities and Exchange Commission today announced that two Citigroup affiliates have agreed to pay nearly $180 million to settle charges that they defrauded investors in two hedge funds by claiming they were safe, low-risk, and suitable for traditional bond investors. The funds later crumbled and eventually collapsed during the financial crisis.
Citigroup Global Markets Inc. (CGMI) and Citigroup Alternative Investments LLC (CAI) agreed to bear all costs of distributing the $180 million in settlement funds to harmed investors.

An SEC investigation found that the Citigroup affiliates made false and misleading representations to investors in the ASTA/MAT fund and the Falcon fund, which collectively raised nearly $3 billion in capital from approximately 4,000 investors before collapsing. In talking with investors, they did not disclose the very real risks of the funds. Even as the funds began to collapse and CAI accepted nearly $110 million in additional investments, the Citigroup affiliates did not disclose the dire condition of the funds and continued to assure investors that they were low-risk, well-capitalized investments with adequate liquidity. Many of the misleading representations made by Citigroup employees were at odds with disclosures made in marketing documents and written materials provided to investors.

From the SEC Website

posted on Aug, 19 2015 @ 10:19 AM
That's like chump change to them.

These people really do get away with murder.

posted on Aug, 19 2015 @ 10:33 AM
If an individual did what Citi did, they would lose licenses, get fined and have to repay defrauded money but their eventual bankruptcy wouldn't even create a ripple in the global economy, which is why the SEC does this to individuals.

If you were to fine banks like Citibank the appropriate amount, you would, most likely, put the bank out of business. So, SEC is faced with a serious conundrum. Punish the bank with appropriate fines and reparations, and send the global economy into an economic tailspin or punish them with just enough to appear tough without actually being tough enough.

I don't agree with the process but I understand the implications of a harsher system. The banks to too and they take the unethical risks because the punishment is nowhere near as much as the profits.

You can see this in all walks of business. H&R Block, for years, would charge fees for advanced refunds that were, annually, deemed usurious. The fines imposed were such that, for years, H&R Block continued the practice. They still made enough money to continue the unethical behavior.

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