UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING

File No. 3-16757

____________________________________

:

In the Matter of :

:

Citigroup Alternative Investments LLC :

and Citigroup Global Markets Inc., :

:

:

Respondents. :

____________________________________:

PLAN OF DISTRIBUTION

A. Introduction

1. 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”). 

2. In the Order, the Commission found that Respondents made material 

misstatements and omissions between 2002 and 2007 concerning the offer and sale of securities 

 

1

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

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.

3. 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.

4. 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.

5. The purpose of this Plan of Distribution (“Plan”) is to refund a portion of the 

investors’ losses between 2002 and 2008 (the “Recovery Period”). The distribution 

methodology allocates the Net Available Distribution Fund (as defined below) to the nine 
3

Potentially Eligible Funds in a manner that attempts to equalize investors’ aggregate recovery of 

losses across those nine funds. The methodology further allocates the distributions among 

harmed investors in proportion to their Investment Amount or Adjusted Investment Amount, as 

the case may be, within each Eligible Fund.

6. Pursuant to the Order, Respondents will pay all reasonable administrative costs 

and expenses of the distribution, including the fees and expenses of the Tax Administrator and 

Fund Administrator. The Tax Administrator and Fund Administrator will submit invoices 

directly to Respondents for payment.

7. The Commission has custody of the Distribution Fund and shall retain control of 

its assets. The Distribution Fund is currently deposited in an interest bearing account at the 

Bureau of the Fiscal Services of the United States Department of the Treasury (“Treasury”), 

where it will be held until a disbursement occurs. It is not anticipated that the Distribution Fund

will receive additional funds, other than accumulated interest and earnings from investments.

8. The Commission appointed Damasco & Associates LLP (“Damasco”) as the Tax

Administrator on October 29, 2015.

2

 Damasco is now known as Miller Kaplan Arase LLP, and 

includes its partners, Jude and Julia Damasco.3

9. In an order dated April 14, 2016, the Commission appointed Garden City Group, 

LLC (“GCG”) as the Fund Administrator and set GCG’s bond at $179,562,328, as provided for

by Rule 1105(a) and 1105(c) of the Commission’s Rules on Fair Fund and Disgorgement Plans

(the “Rules”), 17 C.F.R. §§ 201.1105(a) and 201.1105(c). Any costs or premiums associated 

with the bond will be paid by Respondents.

 

2

See Order Appointing Tax Administrator, Exchange Act Rel. No. 76312 (Oct. 29, 2015).

3

See In the Matter of Certain Disgorgement and Fair Funds in Administrative Proceedings: Notice of Name Change 

of Appointed Tax Administrator, Exchange Act Rel. No. 81064 (Jun. 30, 2017).
4

10. This Plan sets forth the methods and procedures for distributing the Distribution 

Fund.

B. Definitions

As used herein, the following definitions shall apply:

11. “Adjusted Investment Amount” shall mean the revised amount of an Potentially 

Eligible Investor’s investment in a Potentially Eligible Fund, after the Potentially Eligible 

Investor successfully objects to the Investment Amount set forth in his, her or its Investment 

Verification Notice through the Investment Verification Process, as described below. 

12. “Commission” or “SEC” shall mean the Securities and Exchange Commission.

13. “Days” shall mean calendar days, unless specified otherwise.

14. “Distribution Fund” shall refer to all proceeds paid by the Respondents to comply 

with the Order, including $139,950,239 in disgorgement and $39,612,089 in prejudgment 

interest, plus accumulated net interest thereon.

15. “Distribution Fund Allocation” shall mean the portion of the Net Available 

Distribution Fund allocated to each Eligible Fund for distribution to Eligible Investors.

16. “Distribution Payment” shall mean the disbursement to an Eligible Investor of his, 

her or its portion of the Net Available Distribution Fund calculated pursuant to the Plan of 

Allocation.

17. “Distribution Plan” or “Plan” shall mean this distribution plan, in the form 

approved by the Commission.

18. “Eligible Fund” shall mean a Potentially Eligible Fund that is determined to have 

a Recovery Ratio from Payments not exceeding the Equal Recovery Ratio. Under the Plan of 
5

Allocation, prior to any changes resulting from the Investment Verification Process, the Eligible 

Funds are Falcon 2, Falcon 2b, Falcon 3, Falcon 4, Falcon Plus and ASTA/MAT 5.

19. “Eligible Funds Recovery Ratio” shall mean the Recovery Amount per dollar of 

Total Investor Outlays for the funds receiving a Distribution Fund Allocation. The current 

Eligible Funds Recovery Ratio under the Plan of Allocation, prior to any changes resulting from 

the Investment Verification Process, is $0.57 per $1.00 of Total Investor Outlays.

20. “Eligible Investor” shall mean a person who invested in any of the Eligible Funds

during the Recovery Period and who is not an Excluded Party.

21. “Equal Recovery Ratio” shall mean the sum of the Total Payments to Investors 

across all Potentially Eligible Funds plus the Net Available Distribution Fund divided by the 

Total Investor Outlays of all Potentially Eligible Funds. In other words, the Equal Recovery 

Ratio is a quantification of the amount each fund would have received if the Respondents, in 

addressing investor losses, had, through the various repayment efforts described below and 

including this distribution, compensated every fund in proportion to Total Investor Outlays. The 

Equal Recovery Ratio under the Plan of Allocation, prior to any changes resulting from the 

Investment Verification Process, is $0.69 per $1.00 of investor outlays. 

22. “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.

23. “Fund Administrator” shall mean GCG, the firm appointed by the Commission, 

pursuant to Rules 1105(a) and 1105(c) of the Rules, to administer the Plan.
6

24. “Investment Amount” shall mean the dollar amounts invested by a Potentially 

Eligible Investor in any of the nine Potentially Eligible Funds, as set forth in a report submitted 

by Respondents, which lists all investors in the Potentially Eligible Funds, together with the 

amounts of their capital investments. Respondents believe the report is complete and accurate.

25. “Investment Verification Notice” shall mean the notice sent by the Fund 

Administrator to all Potentially Eligible Investors in Potentially Eligible Funds, which sets forth

the Investment Amount provided to the Fund Administrator by Respondents.

26. “Investment Verification Process” shall mean the process by which a Potentially

Eligible Investor verifies or objects to the Investment Amount provided in the Investment 

Verification Notice.

27. “Net Available Distribution Fund” shall mean the Distribution Fund less any 

reserve established for taxes that may be assessed against the Distribution Fund. This amount is 

estimated to be $181,155,501 at the time of distribution.

28. “Plan of Allocation” refers to Exhibit A to this Plan, which describes the 

methodology used to calculate the Distribution Payments for investors in the Potentially Eligible 

Funds.

29. “Potentially Eligible Funds” shall mean the nine underlying funds of the ASTA, 

MAT and Falcon Strategies funds: Falcon 2, Falcon 2b, Falcon 3, Falcon 4, Falcon Plus, 

ASTA/MAT, ASTA/MAT 2, ASTA/MAT 3 and ASTA/MAT 5.

30. “Potentially Eligible Investor” shall mean a person who invested in any of the 

Potentially Eligible Funds during the Recovery Period and who is not an Excluded Party.

31. “Recovery Amount” shall mean, for an Eligible Fund, the Total Payments to 

Investors within that Eligible Fund plus its Distribution Fund Allocation.
7

32. “Recovery Period” shall mean 2002 through and including 2008.

33. “Recovery Ratio from Payments” shall mean, for a Potentially Eligible Fund, that 

fund’s Total Payment to Investors divided by its Total Investor Outlays.

34. “Total Fees Paid” shall mean, for each Potentially Eligible Fund, the aggregate 

amount of advisory fees paid to the Respondents by the investors with respect to that fund during 

the Recovery Period, based on information provided by the Respondents.

35. “Total Investment Amount” shall mean, for each Potentially Eligible Fund, the 

aggregate dollar amounts invested by investors in that fund. The Total Investment Amounts 

shall include all Investment Amounts provided by Respondents, and any Adjusted Investment 

Amounts determined through the Investment Verification Process, which is discussed in detail 

below. To the extent that Investment Amounts are revised through the Investment Verification 

Process, the Total Investment Amounts will change accordingly, along with subsequent 

calculations described in the Plan of Allocation, and Tables 1 and 2 set forth in the Plan of 

Allocation will be amended and posted on the administration website, 

www.AstaMatFalconSECDistributionFund.com.

36. “Total Investor Outlays” shall mean, for each Potentially Eligible Fund, the sum 

of the Total Investment Amount plus Total Fees Paid for that fund.

37. “Total Payments to Investors” shall mean, for each Potentially Eligible Fund, the 

aggregation of all payments made to that fund’s investors either directly from the applicable 

Potentially Eligible Fund or by the Respondents in the form of (a) arbitration awards and 

settlements (collectively, “Settlements”), (b) distributions from the Potentially Eligible Funds, 

(c) Respondents’ reallocation of investment gains, (d) liquidation amounts, (e) redemptions, (f) 

tender offers and tender offer premiums (collectively, “Tender Offers”) and (g) other payments, 
8

based on information provided by the Respondents. Table 3 of the Plan of Allocation shows the 

components of Total Payments to Investors and the amount from each source directed to 

investors in aggregate in each of the Potentially Eligible Funds. 

38. “Tax Administrator” shall mean Miller Kaplan Arase LLP, including its partners, 

Jude Damasco and Julia Damasco, the Tax Administrator appointed by the Commission.

C. The Investment Verification Process and Allocation of the Distribution Fund

39. 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 and will state that the investor will have 30 days from the date 

of the notice to confirm or object to the Investment Amount set forth therein. All confirmations 

and objections must be sent to the Fund Administrator in writing, via email or mail. 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. 

40. All objections to Investment Amounts 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. All investors who submit objections will be notified by the Distribution Agent either 

via email or mail as to the determination of their objections. To the extent that the Investment 
9

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.

41. The Distribution Payments will be computed by the Fund Administrator and 

approved by Commission staff, as set forth in this Plan and the Plan of Allocation, based on data 

provided by the Respondents or as adjusted through the Investment Verification Process set forth 

above. All payments will be distributed to Eligible Investors.

D. Administration of the Distribution Fund

General Administration Provisions

42. The Fund Administrator shall oversee the distribution as provided in this Plan. 

Respondents provided the Fund Administrator with a list of persons identified as investors in the 

Potentially Eligible Funds and their Investment Amounts during the Recovery Period. In 

addition, Eligible Investors who do not agree with their Investment Amount may submit an 

objection and supporting documentation for review by the Fund Administrator and approval by 

Commission staff. The Fund Administrator will review the investment data provided by 

Respondents and any additional information provided by Eligible Investors through the 

Investment Verification Process, and will calculate each Eligible Investor’s distribution pursuant 

to the Plan of Allocation.

43. A person who received or held an investment in an Eligible Fund as a result of a 

gift, transfer, inheritance, devise or operation of law shall be eligible to participate in the 

distribution of the Distribution Fund only to the extent the particular donor or decedent as the 

actual investor would have been eligible. The recipient of an investment in an Eligible Fund 
10

during the Recovery Period by gift, transfer, inheritance, devise, or operation of law shall not 

otherwise be eligible to participate in the distribution with respect to such securities, and shall 

not be deemed the assignee of any claim relating to the purchase of such securities unless 

specifically so provided in the instrument of gift or assignment.

44. The Fund Administrator shall take reasonable and appropriate steps to distribute 

the Distribution Fund according to this Plan and to effectuate the general purposes of the Plan. 

The Fund Administrator will inform Commission staff of any changes needed to this Plan. Upon

approval by Commission staff, the Fund Administrator may implement immaterial changes to 

this Plan to effectuate its general purposes. If a change is deemed to be material by Commission 

staff, Commission approval is required by amending this Plan prior to implementation of the

change.

45. Upon request of the Fund Administrator, for good cause shown, Commission staff 

may extend any procedural deadline contained in this Plan.

46. All fees and expenses of the Fund Administrator associated with the

administration of the distribution will be paid by the Respondents as provided for in the Order. 

The Fund Administrator will provide Commission staff with duplicate copies of all invoices 

submitted to Respondents.

Identification of Potentially Eligible Investors

47. The Respondents have identified and provided the Fund Administrator with a list 

of all investors in the Potentially Eligible Funds, which the Respondents believe is complete and 

accurate.

48. Following the entry by the Commission of its order approving this Plan, the Fund

Administrator shall:

a. Create a case-specific database for Potentially Eligible Investors and their 
11

investment information;

b. Run a National Change of Address search to retrieve updated addresses 

for all records in the new database, and use commercially reasonable 

efforts to identify any missing address information, thereby trying to 

ensure updated mailing information for Potentially Eligible Investors;

c. Provide notice by (i) mailing via United States First Class Mail, the 

Investment Verification Notice to all Potentially Eligible Investors, and 

(ii) mailing by United States First Class Mail a notice and check to 

Eligible Investors or emailing a notice to Eligible Investors receiving 

electronic payments;

d. Establish a website constructed for the administration of the Distribution 

Fund, AstaMatFalconSECDistributionFund.com, which will post 

information and relevant documents;

e. Provide a copy of the Plan to Commission staff for posting to the 

Information for Harmed Investors page of SEC.gov and establishing a link 

to the Distribution Fund’s website; and

f. Establish a toll-free telephone call-in number by which Potentially 

Eligible Investors can obtain information about the Distribution Fund.

Provisions for the Tax Administrator

49. The Distribution Fund constitutes a Qualified Settlement Fund (“QSF”) under 

Section 468B(g) of the Internal Revenue Code, 26 U.S.C. § 468B(g), and related regulations, 26 

C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the administrator of such QSF, 

for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the tax related administrative 
12

requirements imposed by Treas. Reg. § 1.468B-2, including, but not limited to:

a. Obtaining a taxpayer identification number;

b. Timely requesting funds necessary for the timely payment of all applicable 

taxes, the timely payment of taxes for which the Tax Administrator has 

received funds, and the filing of applicable returns; and

c. Fulfilling any information reporting or withholding requirements required 

for distributions from the Distribution Fund.

50. The Fund Administrator shall cooperate with the Tax Administrator in providing 

any information necessary to ensure income tax compliance.

51. All taxes will be paid from the Distribution Fund, subject to the review and 

approval of Commission staff.

Procedures for Distributing the Distribution Fund

52. The Fund Administrator shall distribute the Net Available Distribution Fund to 

Eligible Investors pursuant to this Plan.

53. The Fund Administrator shall prepare a final payee list, which will be comprised 

of all Eligible Investors and their Distribution Payment amounts (“Final Payee List”). The Fund 

Administrator shall provide the Final Payee List to the Commission staff with a reasonable 

assurance letter as to the completeness and accuracy of the list. The Final Payee List shall, upon 

request, be made available to the Commission. Commission staff will obtain authorization from 

the Commission, pursuant to Rule 1101(b)(6) of the Rules, to disburse the funds needed for 

distribution pursuant to the Plan. 

54. The total amount required for the distribution shall be transferred from the 

account at the Treasury to the escrow account established by the Fund Administrator.
13

55. Prior to disbursement of the Distribution Fund, the Fund Administrator will 

establish account(s), as described below, at a United States commercial bank (the “Bank”) that is 

acceptable to the Commission staff. 

56. Pursuant to an escrow agreement (the “Escrow Agreement”) to be provided by 

Commission staff, the Fund Administrator and Bank shall establish an escrow account in the 

name of and bearing the Employer Identification Number (“EIN”) of the Distribution Fund, as 

custodian for the distributees of the Distribution Plan. The name of each account shall be in the 

following form: “Citigroup Distribution Fund,” as custodian for the benefit of investors 

allocated a distribution from the Distribution Plan in In the Matter of Citigroup Alternative 

Investments LLC and Citigroup Global Markets Inc., (the “Citigroup Distribution Fund Escrow 

Account” or “Escrow Account”). The Fund Administrator and Bank shall also establish a 

separate deposit account (e.g., controlled distribution account, managed distribution account, 

linked checking and investment account) titled as set forth above for the purpose of funding 

payments to be distributed to investors by the Fund Administrator pursuant to the Distribution 

Plan (“Deposit Account”).

57. During the term of the Escrow Agreement, if invested, the Escrow Account shall 

be invested and reinvested in short-term Treasury securities backed by the full faith and credit of 

the United States Government or an agency thereof, of a type and term necessary to meet the 

cash liquidity requirements for payments to Eligible Investors and tax obligations, including 

investment or reinvestment in a bank account insured by the Federal Deposit Insurance 

Corporation (“FDIC”) up to the guaranteed FDIC limit, or in money market mutual funds 

registered under the Investment Company Act of 1940 that invest 100% of their assets in direct 

obligations of the United States government. The Fund Administrator shall provide duplicate 
14

original bank and/or investment statements on any accounts established by the Fund 

Administrator to the Tax Administrator on a monthly basis and shall assist the Tax Administrator 

in obtaining mid-cycle statements, as necessary.

58. The Fund Administrator shall deposit or invest funds in the Escrow and Deposit 

Accounts so as to result in the maximum reasonable net return, taking into account the safety of 

such deposits or investments. In consultation with the Commission staff, the Fund Administrator 

shall work with the Bank on an ongoing basis to determine an allocation of funds between the 

Escrow and the Deposit accounts.

59. All funds shall remain in the Escrow Account, separate from bank assets, pursuant 

to the Escrow Agreement until needed to satisfy an electronic transfer of funds initiated by the 

Fund Administrator or to satisfy a presented check. All Distribution Fund checks presented for 

payment will be subject to “positive pay” controls before being honored by the Bank, and all 

such checks issued to Eligible Investors by the Fund Administrator shall bear a stale date of 

ninety (90) days. Accordingly, checks that are not negotiated within this period shall be voided 

and the issuing financial institution shall be instructed to stop payment on those checks. All such 

funds will be returned to the Distribution Fund. If the Eligible Investor submits a valid, written 

request for reissue during the 90 days following the issuance of the check, such reissued checks 

will be void after thirty (30) days from issuance and in no event will a check be reissued after 

ninety (90) days post-distribution without permission from Commission staff. 

60. The Fund Administrator shall use all reasonable commercially available resources 

to locate all Eligible Investors whose checks are returned to the Fund Administrator as 

undeliverable by the U.S. Postal Service.

61. All distribution payments shall be preceded or accompanied by a communication 
15

that includes, as appropriate:

a. A statement characterizing the distribution;

b. A statement that the tax treatment of the distribution is the responsibility 

of each recipient and that the recipient should consult his or her tax 

advisor for advice regarding the tax treatment of the distribution;

c. A statement that checks will be void after ninety (90) days; and

d. The name of a person or entity to contact, if the Eligible Investor has any 

questions regarding the distribution.

Any such communication shall be submitted to the Commission staff and the Tax Administrator 

for review and approval. The Distribution Fund distribution payments, on their face, or the 

accompanying mailing shall clearly indicate that the money is being distributed from a 

Distribution Fund established by the SEC to compensate investors for harm as a result of their 

investment in the Eligible Funds.

Liability 

62. The receipt and acceptance of a distribution by an Eligible Investor is not 

intended to be a release of an Eligible Investor’s rights and claims against any party.

Returned or Uncashed Checks

63. The Fund Administrator shall reissue checks to Eligible Investors, upon the 

receipt of a valid, written request from the Eligible Investor. Such reissued checks will be void 

after thirty (30) days from issuance and in no event will a check be reissued after ninety (90) 

days post-distribution without Commission staff permission.
16

64. The Fund Administrator will perform advanced address searches for those checks 

that are returned as undeliverable, to the extent such search is feasible, and will reissue such 

checks so long as the new address is received within ninety (90) days post-distribution. 

65. One hundred and twenty (120) days following the distribution, all approved final 

fees and expenses shall be paid, all outstanding checks shall be voided, and any remaining funds 

shall be paid to the Commission for transfer to the Treasury upon receipt of written instructions 

by the Fund Administrator.

Residual Funds and Final Accounting

66. After payments have been accepted and cashed, any amounts remaining in the 

Distribution Fund will constitute the Distribution Fund residual (“Residual”). The Residual may 

include payments that have not been cashed or payments that were not delivered or from funds 

returned to the Fund Administrator. In the event there is a residual of undistributed Distribution 

Fund funds, Commission staff will seek an order of disbursement for an additional distribution to 

Eligible Investors who cashed their distribution checks or received an electronic payment in the 

initial disbursement of the Distribution Fund, unless, the Commission staff determines in its 

discretion, that the administrative costs of such a distribution exceed the amount of the Residual. 

Should the administrative costs of such a distribution exceed the amount of the Residual, the 

Commission staff retains discretion to determine whether such a Residual distribution should be 

implemented. Otherwise, the Residual will be transferred to the Treasury after the final 

accounting is approved by the Commission. 

67. Upon completion of the distribution of the Distribution Fund, the Fund 

Administrator will make arrangements with the Respondents for the final payment of taxes and 

filing the final tax returns and the Fund Administrator will provide a final accounting to 
17

Commission staff for submission to the Commission. The Distribution Fund will be eligible for 

termination, and the Fund Administrator will be discharged, after all of the following have 

occurred: (a) a final accounting, in the accounting format provided by the Commission staff, has 

been submitted by the Fund Administrator to Commission staff for approval, and the final 

accounting has been approved by the Commission; (b) all income taxes and other fees due and 

owing by the Distribution Fund have been paid by the Respondents; (c) all taxes withheld from 

distributions to Eligible Investors have been tendered to the appropriate tax agencies; (d) all 

expenses associated with the administration of the Distribution Fund have been paid by the 

Respondents; and (e) any amount remaining in the Distribution Fund has been received by the 

Commission. When the Commission has approved the final accounting, the Commission staff 

will arrange for the transfer of any amount remaining in the Distribution Fund to the Treasury, 

and will seek an order from the Commission to approve the termination of the Distribution Fund

and discharge the Fund Administrator. 

68. Once the funds, if any, are returned to the Commission, no additional payments 

shall be made whatsoever as the full and final distribution of the Distribution Fund will have 

been accomplished.

Filing of Reports and Accountings

69. The Fund Administrator shall provide Commission staff with a progress report 

and a quarterly account statement in a format to be provided by the Commission staff, within 

forty-five (45) days of the entry of this Distribution Plan, and shall provide to Commission staff 

additional reports and quarterly account statements within ten (10) days after the end of every 

calendar quarter thereafter.

70. Such progress reports shall inform Commission staff of the activities and status of 
18

the Distribution Fund during the requested reporting period, and shall specify, at a minimum, the 

location of the account(s) comprising the Distribution Fund, including, among other things, an 

interim accounting of all monies in the Distribution Fund as of the most recent month-end, 

including all monies received, earned, spent, and distributed in connection with the 

administration of the Distribution Plan, the value of those accounts, all monies earned or 

received into these accounts, funds distributed to Eligible Investors under this Distribution Plan, 

and any monies expended from the Distribution Fund to satisfy any fees, costs, taxes, and other 

expenses incurred in the implementation of this Distribution Plan. The final report shall include, 

among other things, a final accounting of all monies received, earned, spent, and distributed in 

connection with the administration of the Distribution Plan.

71. The Fund Administrator will maintain all documents, including documents in any 

media, for six (6) years after the transfer of any remaining funds to the Commission. Pursuant to 

Commission direction, the Fund Administrator will either turn over to the Commission or 

destroy all documents six (6) years after the approval of the final accounting. 

72. Upon completion of the distribution of the Distribution Fund and when a final 

accounting by the Tax Administrator has been requested, the Fund Administrator will shut down 

the toll-free number and website established specifically for the administration of the 

Distribution Fund transfer any remaining undistributed funds to the Commission.

Other Rights and Powers

73. The Fund Administrator, and/or each of its designees, agents and assistants, shall 

be entitled to rely on all outstanding rules of law; and any orders issued by the Commission, the 

Secretary by delegated authority or an Administrative Law Judge; and/or any investor 

information provided by Commission staff. 
19

74. The Fund Administrator is authorized to enter into agreements with financial 

institutions (“Institutions”) as may be appropriate or necessary in the administration of the

Distribution Fund, provided that such Institutions are not excluded pursuant to other provisions 

of this Distribution Plan. In connection with such agreements, the Institutions shall be deemed to 

be agents of the Fund Administrator under this Distribution Plan.

75. The assets of the Distribution Fund are subject to the continuing jurisdiction and 

control of the Commission, including all proceedings with respect to the administration, 

processing, and calculations of the distribution payments and the determination of all related 

controversies.

76. The Commission reserves its right to amend this Plan from time to time, and 

retains jurisdiction and control over this matter for the purpose of amendment and any and all 

other matters that may arise under or relate to this Plan.
20

EXHIBIT A

PLAN OF ALLOCATION

An Eligible Investor’s Distribution Payment will be calculated as set forth below. 

1. The Distribution Fund Allocation will be each Eligible Fund’s portion of the Net 

Available Distribution Fund to be distributed to the Eligible Investors. In other words, there will 

be a separate pool of distribution funds allocated to each Eligible Fund. The allocation to each 

Eligible Fund is based on whether the fund has realized a Recovery Ratio from Payments equal to 

or greater than the Equal Recovery Ratio, as set forth in Table 1 below. The Equal Recovery 

Ratio is determined by dividing the sum of Total Payments to Investors across all nine Potentially 

Eligible Funds (Column 4 in Table 1 below, $2,073,415,561) and the Net Available Distribution 

Fund ($181,155,501) by the sum of the Total Investor Outlays across all nine Potentially Eligible 

Funds (Column 3, $3,275,401,069).4 Accordingly, the Equal Recovery Ratio is a quantification 

of the amount each fund would have received if the Respondents, in addressing claims by harmed 

investors, had compensated every fund pro rata based on each fund’s Total Investor Outlays. The 

Equal Recovery Ratio is $0.69 per $1.00 of Total Investor Outlays. 

2. Three funds received Total Payments to Investors that result in a Recovery Ratio 

from Payments in excess of the Equal Recovery Ratio: ASTA/MAT, ASTA/MAT 2 and 

ASTA/MAT 3. See Column 5 in Table 1 below. Because these three funds have already 

received more through the various repayment efforts than the amount they would have received 

using the Equal Recovery Ratio, their investors will not recover further from the Net Available 

 

4 Respondents provided capital investment information for each of the nine Potentially Eligible Funds and for each 

investor in those funds. Respondents also provided fee payment data and information regarding repayments to 

investors at the fund level for each of the Potentially Eligible Funds. Table 3 shows the components of Total 

Payments to Investors for each Potentially Eligible Fund. Compare Table 3 to Table 1, column 4.
21

Distribution Fund. Therefore, each of the three funds’ Distribution Fund Allocation will be zero 

and, to the extent investors invested in these three funds, they are not eligible for a distribution. 

Table 1

Potentially 

Eligible Fund

Total 

Investment 

Amount

[1]

Total Fees 

Paid

[2]

Total Investor 

Outlays

[3] = [1] +[2]

Total 

Payments to 

Investors

[4]

Recovery Ratio

from Payments

[5] = [4] / [3]

Falcon 2 $437,228,704 $24,932,911 $462,161,615 $203,043,407 $0.44

Falcon 2b $348,612,015 $8,925,999 $ 357,538,014 $181,104,935 $0.51

Falcon 3 $193,091,896 $6,154,753 $199,246,649 $102,871,590 $0.52

Falcon 4 $70,650,000 $573,557 $71,223,557 $39,972,790 $0.56

Falcon Plus $28,500,000 $916,557 $29,416,557 $8,593,172 $0.29

ASTA/MAT $195,996,431 $30,222,492 $ 226,218,923 $229,510,877 $1.01*

ASTA/MAT 2 $418,837,715 $66,614,622 $485,452,337 $427,149,779 $0.88*

ASTA/MAT 3 $573,201,907 $53,311,368 $626,513,275 $501,298,909 $0.80*

ASTA/MAT 5 $796,772,105 $20,858,037 $817,630,142 $379,870,102 $0.46

Sum $3,062,890,773 $212,510,296 $3,275,401,069 $2,073,415,561

*Funds with a Recovery Ratio from Payments that exceeds the Equal Recovery Ratio of $0.69.

3. For the remaining Eligible Funds, the Net Available Distribution Fund will be 

allocated, as set forth in Table 2 below, in such a way as to equalize the recovery per dollar of 

investor outlays across the funds. This Eligible Funds Recovery Ratio is determined by dividing 

the sum of the Total Payments to Investors across the six Eligible Funds (Column 4 of Table 2 

below, $915,455,996) and the Net Available Distribution Fund ($181,155,501) by the sum of the 

Total Investor Outlays across the six funds (Column 3, $1,937,216,534). This yields the Eligible 

Funds Recovery Ratio of $0.57 per $1.00 of Total Investor Outlays. 

4. Multiplying each Eligible Fund’s Total Investor Outlays by the Eligible Funds 

Recovery Ratio yields the Equal Recovery Amount for each fund in Column 5 of Table 2. The 

allocation of the Net Available Distribution Fund (in Column 6 below) for each Eligible Fund is 

determined by subtracting Total Payments to Investors from the Equal Recovery Amount. 
22

Table 2

Eligible Fund

Total 

Investment 

Amount

[1]

Total Fees 

Paid

[2]

Total Investor 

Outlays

[3] = [1] +[2]

Total 

Payments to 

Investors

[4]

Equal 

Recovery 

Amount

[5] = 0.57 * [3]

Distribution 

Fund 

Allocation 

based on 

Equal 

Recovery

[6] = [5] - [4]

Eligible 

Funds 

Recovery 

Ratio

[7] = ([4]+[6])

/ [3]

Falcon 2 $437,228,704 $24,932,911 $462,161,615 $203,043,407 $261,618,529 $58,575,122 $0.57

Falcon 2b $348,612,015 $8,925,999 $357,538,014 $181,104,935 $202,393,635 $21,288,700 $0.57

Falcon 3 $193,091,896 $6,154,753 $199,246,649 $102,871,590 $112,788,716 $9,917,126 $0.57

Falcon 4 $70,650,000 $573,557 $71,223,557 $39,972,790 $40,317,936 $345,146 $0.57

Falcon Plus $28,500,000 $916,557 $29,416,557 $8,593,172 $16,652,003 $8,058,831 $0.57

ASTA/MAT 5 $796,772,105 $20,858,037 $ 817,630,142 $379,870,102 $462,840,678 $82,970,576 $0.57

Sum $1,874,854,720 $62,361,814 $1,937,216,534 $915,455,996 $1,096,611,497 $181,155,501 

5. Each Eligible Investor’s Distribution Payment will be calculated on a pro rata

basis within each fund and will be determined by multiplying the Eligible Fund’s Distribution 

Fund Allocation by the ratio of the investor’s Investment Amount in the Eligible Fund to the 

fund’s Total Investment Amount. For example, based on Table 2 above, an investor with an 

Investment Amount of $2,000,000 in Falcon Plus would receive a Distribution Payment of 

$565,532, as follows: the Distribution Fund Allocation (Column 6) of $8,058,831 is multiplied 

by the Investment Amount of $2,000,000 and then divided by the Falcon Plus fund’s Total 

Investment Amount of $28,500,000 (Column 1). 

6. In the event that Eligible Investors’ objections (if any) to their Investment 

Amounts result in Adjusted Investment Amounts pursuant to the Investment Verification 

Process, the calculations presented in paragraphs 1 through 5 above will be amended after 

replacing those investors’ Investment Amounts with their Adjusted Investment Amounts. If any 

such changes result in material differences, revised versions of Table 1 and Table 2 will be 

posted on the administration website, www.AstaMatFalconSECDistributionFund.com. 
Table 3: ASTA/MAT Falcon Payments Made to Investors

Potentially Eligible 

Fund

Tender 

Offers and 

Tender Offer 

Premiums

Reallocation

of Investment 

Gains

Arbitration 

Settlements 

and Awards Redemptions Distributions

Liquidation

Amounts

Other 

Payments

Total 

Payments 

to Investors

Falcon 2 $86,574,496 $0 $3,258,992 $0 $58,136,148 $0 $55,073,771 $203,043,407

Falcon 2b $89,567,374 $0 $2,476,301 $0 $22,410,059 $0 $66,651,201 $181,104,935

Falcon 3 $49,444,461 $0 $1,218,167 $0 $17,606,629 $0 $34,602,333 $102,871,590

Falcon 4 $18,813,668 $0 $1,278,114 $0 $0 $0 $19,881,008 $39,972,790

Falcon Plus $0 $0 $4,554,771 $0 $0 $0 $4,038,401 $8,593,172

Total Falcon $244,399,999 $0 $12,786,345 $0 $98,152,836 $0 $180,246,714 $535,585,894

ASTA/MAT $0 $38,500,286 $10,660,542 $44,162,574 $102,926,725 $33,260,750 $0 $229,510,877

ASTA/MAT 2 $0 $82,273,803 $29,676,804 $79,055,260 $178,100,401 $58,043,511 $0 $427,149,779

ASTA/MAT 3 $0 $112,530,060 $71,805,735 $86,669,665 $165,482,579 $64,810,870 $0 $501,298,909

ASTA/MAT 5 $195,511,851 $29,695,851 $61,894,410 $24,012,799 $65,567,828 $3,187,363 $0 $379,870,102

Total ASTA/MAT $195,511,851 $263,000,000 $174,037,491 $233,900,298 $512,077,533 $159,302,494 $0 $1,537,829,667

Grand Total $439,911,850 $263,000,000 $186,823,836 $233,900,298 $610,230,369 $159,302,494 $180,246,714 $2,073,415,561