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|1.||What is this matter about?|
On August 17, 2015 the Securities and Exchange Commission (“SEC” or “Commission”) issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Section 15(b)(4) of the Securities Exchange Act of 1934, and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”)1 against Citigroup Alternative Investments LLC (“CAI”) and Citigroup Global Markets Inc. (“CGMI”) (together, “Respondents”).
In the Order, the Commission found that Respondents made material misstatements and omissions between 2002 and 2007 concerning the offer and sale of securities in the two now-defunct hedge funds named ASTA and MAT funds (“ASTA/MAT”) and Falcon Strategies funds (“Falcon”), comprised of the following nine separate underlying funds: Falcon 2, Falcon 2b, Falcon 3, Falcon 4, Falcon Plus, ASTA/MAT, ASTA/MAT 2, ASTA/MAT 3 and ASTA/MAT 5 (collectively, the “Potentially Eligible Funds”). From 2002 through 2008, Respondents misrepresented the funds’ risks and performance to advisory clients. Respondents raised approximately $2.898 billion from approximately 4,000 investors in ASTA/MAT and Falcon. In 2008, both funds collapsed resulting in billions of dollars in losses. As a result of this conduct, the Commission found that the Respondents willfully violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, which prohibit fraudulent conduct in the offer or sale of securities. In addition, CGMI willfully violated Section 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”) and CAI violated Section 206(4) of the Advisers Act and Rules 206(4)-7 and 8 promulgated thereunder.
Pursuant to the Order, Respondents paid disgorgement of $139,950,239 and prejudgment interest of $39,612,089. A fund (the “Distribution Fund”) has been created for distribution to harmed investors and consists of the $179,562,328 paid by Respondents, as well as net accrued interest.
The purpose of the Plan of Distribution (“Plan”) is to refund a portion of the investors’ losses between 2002 and 2008 (the “Recovery Period”).
Respondents have provided capital investment information for each of the nine Potentially Eligible Funds and for each investor in those funds. From their records, Respondents also provided fee payment data and information regarding various repayment efforts made to investors at the fund level for each of the Potentially Eligible Funds.
|2.||Why did I receive an Investment Verification Notice?|
You received the Investment Verification Notice because our records indicate that you have been identified as a Potentially Eligible Investor who invested in any of the Potentially Eligible Funds (Falcon 2, Falcon 2b, Falcon 3, Falcon 4, Falcon Plus and ASTA/MAT 5) during the Recovery period from 2002 through and including 2008.
|3.||Who is eligible to participate in the ASTA/MAT Falcon SEC Distribution Fund?|
If you invested in any of the Potentially Eligible Funds (Falcon 2, Falcon 2b, Falcon 3, Falcon 4, Falcon Plus, ASTA/MAT, ASTA/MAT 2, ASTA/MAT 3 and ASTA/MAT 5) from 2002 through and including 2008 you are eligible to participate in the ASTA/MAT Falcon SEC distribution Fund.
|4.||How are Potentially Eligible Investors being identified?|
The Respondents have identified and provided the Fund Administrator with a list of all investors in the Potentially Eligible Funds.
|5.||Who is excluded from participation in the Distribution Fund?|
Excluded Parties shall mean Respondents and all other entities or individuals who
(a) are or have at any time been a parent, subsidiary, affiliate, partner, or member of Respondents;
(b) exercised control of or were controlled by the Respondents; or
(c) during the period 2002 to the present, were employed by, or served as officers or directors, or were members of the Respondents or any other entity that is deemed to be an Excluded Party
|6.||What is the amount of the Distribution?|
The Distribution Fund consists of the $179,562,328 paid by Respondents, as well as net accrued interest.
|7.||Do I need to file a claim?|
There will be no claim process in connection with the Distribution Fund. However, prior to the calculation of Distribution Payments, an Investment Verification Notice will be sent by the Fund Administrator to all Potentially Eligible Investors identified by the Respondents. The Investment Verification Notice will set forth the Investment Amount for each such Potentially Eligible Investor. Potentially Eligible Investors will have 30 days from the date of the Investment Verification Notice to confirm or object to the Investment Amount.
|8.||How do I Confirm or Object to the Investment Amount set forth in the Investment Verification Notice?|
All confirmations must be sent in writing to the Fund Administrator in the following ways: by email to Questions@AstaMatFalconSECDistributionFund.com, or mail to:
ASTA/MAT Falcon SEC Distribution Fund c/o GCG P.O. Box 9349 Dublin, OH 43017-4249
If a Potentially Eligible Investor fails to respond to the Investment Verification Notice within 30 days, the Potentially Eligible Investor will be deemed to have confirmed the Investment Amount set forth in the Investment Verification Notice.
If you wish to object to the Investment Amount set forth on the Investment Verification Notice, your objection must state the amount of the investment asserted by the Potentially Eligible Investor, and must be accompanied by supporting documentation sufficient to prove such amount. The Fund Administrator will review all timely objections and will determine, in consultation with Commission staff, whether the documentation submitted is sufficient to establish an adjustment in the investor’s Investment Amount.
|9.||How much money will I receive if I am an Eligible Investor?|
The Fund Administrator will calculate each Potentially Eligible Investor’s distribution payment pursuant to the Plan of Allocation described in the Plan.
To the extent that the Investment Verification Process results in a material difference to the Total Investment Amount in any Potentially Eligible Fund, revised versions of Tables 1 and 2 set forth in the Plan of Allocation will be calculated again and posted on the administration website, www.AstaMatFalconSECDistributionFund.com.
|10.||Who is the Fund Administrator?|
The Commission has appointed Garden City Group, LLC to serve as the Fund Administrator.
|11.||How is the Fund Administrator being paid?|
All fees and expenses of the Fund Administrator associated with the administration of the distribution will be paid by the Respondents.
|12.||Who is the Tax Administrator?|
The Commission has appointed Miller Kaplan Arase LLP, including its partners, Jude Damasco and Julia Damasco to serve as the Tax Administrator.
|13.||How is the Tax Administrator being paid?|
All taxes will be paid from the Distribution Fund, subject to the review and approval of Commission staff.
|14.||How do I get more information?|
Additional information regarding the Distribution Fund can be found at AstaMatFalconSECDistributionFund.com. If you have any questions you can call the Distribution Fund's toll-free hotline at (800) 231-1815, or email the Fund Administrator at Questions@AstaMatFalconSECDistributionFund.com.