Citigroup (C.N) must pay $6.38 million to a Chicago investment banker over his losses from Citi municipal arbitrage funds that were wiped out by the credit crisis, a FINRA arbitration panel ruled. Theodore Berghorst, chief executive of Chicago investment bank Vector Securities, in November 2008 filed a claim against Citigroup's Smith Barney and Citigroup Alternative Investments in 2008 seeking damages for losses in MAT (municipal arbitrage trust) Finance LLC. Between 2002 and 2007, Citi sold shares in funds that were leveraged 8-to-1 and invested in municipal bonds. These funds proceeded to lose 80 percent or more of their value between May 2007, when the credit crunch hit, and the collapse of Bear Stearns in March 2008.
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