Securities Litigation and Consulting Group, Inc. Releases Leveraged Municipal Bond Hedge Fund Study

WASHINGTON, Jan. 29 /PRNewswire/ — Securities Litigation and Consulting Group, Inc. (“SLCG”) has issued a new study on leveraged municipal bond hedge funds — including Citigroup’s MAT 3, MAT V and Falcon Strategies. Substantial losses suffered by these hedge funds have brought attention to the risks involved in the leveraged municipal arbitrage strategy. The study reports that more than 35 similar hedge funds, including Stone & Youngberg Municipal Advantage Fund, 1861 Capital Management, Gem Capital, Rockwater Hedge Fund, LLC, and Blue River Asset Management Main Muni Fund were marketed to investors as high yield, low risk alternatives to traditional municipal bond funds.

The SLCG study explains what the leveraged municipal bond arbitrage strategy is and why it failed. The study concludes that the leveraged municipal bond arbitrage strategy was based on as assumed, but non-existent, market inefficiency, producing high returns with predictably higher volatility than investing in Treasury securities, municipal bonds, or even common stocks. The SLCG study also shows that much of the losses suffered by investors were suffered during a period of relatively routine interest rates and not during an unprecedented interest rate environment.

This study and other working papers are available at http://www.slcg.com/research.php.

Securities Litigation and Consulting Group, Inc. (“SLCG”) is a financial economics consulting firm based in the Virginia suburbs outside of Washington, DC. SLCG provides consulting services and expert witnesses to law firms, publicly-traded corporations, banks, brokerage firms and individuals involved in complex litigation throughout the United States. SLCG’s staff includes PhD, MA and BA level professionals with academic, industry and government experience. Its experts have testified in state and federal court and in various arbitration forums.

For further information about SLCG or its research, please contact Dr. Craig McCann at 703-246-9381, craigmccann@slcg.com or visit us at http://www.slcg.com.

SOURCE Securities Litigation and Consulting Group, Inc.