A failed hedge fund, whose manager was jailed for fraud, sued Citigroup over allegations the bank undervalued assets when it closed out trades at the height of the 2008 financial crisis.
Bloomberg News reports that liquidators of Millennium Global Emerging Credit Fund Ltd., which had almost $1 billion in losses, said Citigroup terminated positions too quickly and at rates that didn’t reflect the market, according to court papers filed in October and made available last week. The liquidators are seeking about $53 million in damages.
Citigroup said the positions, linked to the debt of Sri Lanka, Uganda, a Zambian sugar company and a brewer from the Dominican Republic, were illiquid and hard to value even in good market conditions, according to its defense papers. The bank admitted that it mis-valued some trades but 'the adjustments are significantly smaller than Millennium claims', it said in its response to the lawsuit filing.
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