| 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. |
