Securities regulators have ordered Citigroup Inc. to pay $54 million to two investors who suffered hefty losses in several municipal bond hedge funds between 2002 and 2007.
An arbitration panel of the Financial Industry Regulatory Authority in Denver awarded the investors $34.1 million in compensatory damages and $17 million in punitive damages in an order signed Monday.
Investors Jerry Murdock Jr. and Gerald Hosier filed claims with regulators in June 2009 over their losses in the MAT Finance and ASTA Finance funds launched by Citigroup Global Markets Inc.
The investors’ attorney says Citigroup marketed the funds as being of little more risk than municipal bonds, when in fact they were far more risky.
Citigroup said Tuesday it is disappointed with the decision and is reviewing its options.
The Financial Industry Regulatory Authority (FINRA) is a non-governmental organization overseeing brokerage firms and their registered representatives in the United States. Established in 2007 through the merger of the NASD and the regulatory functions of the New York Stock Exchange, FINRA operates under the authority of the Securities and Exchange Commission (SEC). Its primary role is to ensure that the securities industry operates fairly and transparently, protecting investors and maintaining market integrity.
FINRA enforces rules and regulations governing the conduct of financial professionals and firms, conducting routine examinations and investigating potential violations. It also provides a platform for resolving disputes between investors and firms through its arbitration and mediation services. In addition, FINRA offers educational resources for investors to enhance their understanding of financial markets and products.
The organization plays a critical role in maintaining confidence in the financial system by promoting ethical behavior, implementing rigorous compliance standards, and fostering transparency. By overseeing a vast network of brokerage firms and individual brokers, FINRA helps ensure that investors are treated fairly and that financial markets operate efficiently and equitably.