Citigroup offers $250m to Falcon Strategies investors

May 22nd, 2008
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Investors in Citigroup's Falcon Strategies hedge fund are being offered a $250 million compensation package in return for dropping legal claims against the company. The Falcon Strategies hedge fund traded mortgage bonds, government debt, and credit derivatives, and realized huge losses in the credit crunch. Investors include large banks such as Wachovia as well as Citigroup clients advised to invest in the fund by brokers from its Smith Barney wealth management division. Citigroup is facing a class action suit from private clients claiming that the fund was misrepresented to them. Both the lawsuit and the compensation package could be troublesome for Citigroup and its competitors, who may face similar problems in the future.


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