Corporate & Securities Law

SEC Investigates The Falcon Strategies LLC Hedge Fund Redemption Offer By Citigroup

By James Eccleston

Citigroup, the biggest U.S. bank by assets, has said that the Securities and Exchange Commission has requested records relating to the firm's hedge funds as part of an informal inquiry. 

Citigroup disclosed the review in a document filed May 28 in federal court in Manhattan, where investors in the bank's Falcon Strategies LLC fund have sued to halt a tender offer for their shares.  Citigroup is trying to liquidate the fund, which has lost 80 percent of its value, according to court papers.  The investors say they haven't been given enough information to gauge the value of their stakes.

Citigroup has offered 45 cents per share in the Falcon Strategies LLC tender offer, which began May 8.  The net asset value of the shares was $1 when the fund got started in 2004.  The NAV is now between 19 and 21 cents, Citigroup has said in court papers.

On March 20, Citgroup said it was suspending redemptions and distributions from the Falcon fund, and has since been liquidating it.

Investors who have purchased Falcon strategies and wish guidance as to whether or not to accept the redemption offer should contact attorneys at SNSFE.

Source:  Bloomberg.com 

Full post as published by FinancialCounsel on June 16, 2008 (boomark / email).