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Aravali Summary
ASTA, MAT and Falcon were private placements sold by Citigroup Global Markets Inc. and Citicorp Investment Services. ASTA and MAT engaged in an extraordinarily complex strategy known as leveraged municipal arbitrage. This same strategy was also a principal component of the Falcon series of funds. The ASTA, MAT and Falcon funds were substantially insolvent by February 2008. Their insolvency was preceded by a period of extreme volatility that climaxed, at least for a time, in August 2007. The ASTA, MAT and Falcon investors who were not advised to, or did not instruct their Citi financial advisors to redeem their shares, lost the majority of their investment principal. Because of the extraordinary complexity of Aravali's leveraged municipal arbitrage strategy, most investors were dependent upon their financial advisor's superior knowledge, sophistication, and ability to conduct ongoing due diligence of Aravali, in order to decide whether to accept Aravali's offer to redeem. Investors who did not accept Aravali's offer lost almost the entirety of their remaining capital. Some investors may have valid claims against Deutsche Bank for losses suffered as a result of not redeeming in June 2008.