UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 81570 / September 11, 2017

ADMINISTRATIVE PROCEEDING 

File No. 3-16757

In the Matter of

Citigroup Alternative Investment LLC and 

Citigroup Global Markets Inc.

Respondents.

NOTICE OF PROPOSED PLAN OF 

DISTRIBUTION AND OPPORTUNITY 

FOR COMMENT

Notice is hereby given, pursuant to Rule 1103 of the United States Securities and 

Exchange Commission’s (“Commission”) Rules on Fair Fund and Disgorgement Plans 

(“Rules”), 17 C.F.R.§ 201.1103, that the Division of Enforcement has submitted to the 

Commission a proposed plan of distribution (“Plan”) for the distribution of monies paid by 

Citigroup Alternative Investment LLC (“CAI”) and Citigroup Global Markets Inc. (“CGMI”) 

(collectively, “Respondents”) in the above-captioned matter.

On August 17, 2015, the 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 (the “Order”)1against Respondents. In the Order, the Commission 

found that Respondents made material misstatements and omissions between 2002 and 2008 

relating to both the offer and sale of securities in the two now defunct hedge funds—the ASTA 

and MAT funds, and the Falcon Strategies fund—as well as the performance of those funds prior 

to their collapse. As a result of the conduct described in the Order, CAI and CGMI 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”), which prohibits any adviser from 

engaging in any transaction, practice or course of business which operates as a fraud or deceit 

upon any client or prospective client, and CAI willfully violated Section 206(4) of the Advisers 

Act , which prohibit an investment adviser from providing investment advice to clients without 

adopting and implementing written policies and procedures reasonably designed to prevent 

violation of the Act, and Rules 206(4)-7 and 206(4)-8 promulgated thereunder. 

 

1

 Securities Act Rel. No. 9893 (Aug. 17, 2015).
2

The Commission ordered the Respondents to pay disgorgement of $139,950,239.00 and 

prejudgment interest of $39,612,089.00. On August 20, 2015, Respondents paid a total of 

$179,562,328.00, which comprises the distribution fund (“Distribution Fund”). The Order also 

required the Respondents to pay all costs and expenses associated with distribution of the 

Disgorgement Fund, including the fees and expenses of both the Fund and Tax Administrators.

OPPORTUNITY FOR COMMENT

Pursuant to this Notice, all interested persons are advised that they may obtain a copy of 

the Plan from the Commission’s public website at http://www.sec.gov/litigation/fairfundlist.htm.

Interested persons may also obtain a written copy of the Plan by submitting a written request to 

Nancy Chase Burton, Esq., United States Securities and Exchange Commission, 100 F Street,

NE, Washington, DC 20549-5876. All persons who desire to comment on the Plan may submit 

their comments, in writing, no later than thirty (30) days from the date of this Notice:

1. to the Office of the Secretary, United States Securities and Exchange

Commission, 100 F Street, NE, Washington, DC 20549-1090;

2. by using the Commission’s Internet comment form 

(http://www.sec.gov/litigation/admin.shtml); or

3. by sending an e-mail to rule-comments@sec.gov.

Comments submitted should include “Administrative Proceeding File No. 3-16757” in

the subject line. Comments received will be publicly available. Persons should submit only 

information that they wish to make publicly available.

THE PLAN

The Distribution Fund is comprised of $179,562,328.00 in disgorgement, and prejudgment 

interest, paid by Respondents, plus accrued interest. The purpose of this Plan is to refund a 

portion of the investors’ losses between 2002 and 2008. Respondents have identified and 

provided the Fund Administrator2 with a list of all investors in the Potentially Eligible Funds, 

which Respondents represent to be complete and accurate. The Plan provides for the Net 

Available Distribution Fund to be distributed to Eligible Investors based upon the data provided 

by Respondents. The distribution methodology allocates the Net Available Distribution Fund to 

the nine Potentially Eligible Funds in a manner that attempts to equalize recovery of losses 

 

2

 All capitalized terms used, but not herein defined shall have the same meanings ascribed to them in the Plan.
3

across those nine Potentially Eligible Funds. Then funds are distributed from each harmed fund 

on a pro rata basis to the harmed investors in that fund.

For the Commission, by its Secretary, pursuant to delegated authority.

Brent J. Fields 

Secretary