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Investor Sues Citigroup for $400 Million Lost in CSO Fund

An investor recently commenced legal action attempting to recover $400 million lost in Citigroup Alternative Investments LLC’s Corporate Special Opportunities Fund. The investor, David Beach, is suing Citigroup, accusing the bank of misleading investors about debt trading in ProSiebenSat. 1 Media AG, (PSM). ProSiebenSat. 1 is a German firm and one of Europe’s biggest broadcasters.

Investor Sues Citigroup for $400 million Lost in CSO Fund

According to the complaint, which was filed in Manhattan federal court, John Picket, the CSO’s founder, leveraged the assets of the fund in order to purchase debt in the German firm’s offering worth around 558 million Euros, or $730 million. Allegedly, following Pickett’s actions, the CSO fund suffered significant losses. Reportedly, in December 2007, Pickett resigned.

Beach’s investment fraud lawyers stated in the complaint that, “investors were not informed that his departure was the result of his breaches of the fund’s investment restrictions.” Citigroup spokeswoman Danielle Romero-Apsilos declined to comment in relation to the suit.

According to securities fraud attorneys, this is not the first case against Citigroup in relation to the CSO fund. In April 2008, a hedge fund firm filed a lawsuit against Citigroup. The case is Robeco-Sage Capital v. Citigroup Alternative Investments LLC, 601030/2008, New York Supreme Court (Manhattan). Robeco-Sage Capital alleged that Pickett’s “disastrous” investment had resulted in damages to the firm. According to Manhattan court records, this case is no longer active. 

The current case is Beach v. Citigroup Alternative Investments LLC, 12-cv-7717, U.S. District Court for the Southern District of New York (Manhattan).

According to the bank, Citigroup Alternative Investments has, since the alleged misconduct occurred, been restructured. Part of the bank was renamed Citi Capital Advisors.

If you suffered significant losses in the now-defunct Citigroup CSO, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.


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