New York (HedgeCo.net) – In what can best be described as pure irony, Citigroup is being sued by a hedge fund for the mispricing of assets toward the end of the financial crisis. The ironic part is that the fund that is suing Citi, their manager was jailed for fraud due to mispricing of assets.

The fund, Millennium Global Emerging Credit Fund Ltd., saw fund manager Michael Balboa sentenced to four years in prison for overstating the price of Nigerian sovereign debt.

According to a recent article from Bloomberg, the foundation of Millennium’s suit stems from the pricing of sovereign debt from Sri Lanka and Uganda, a sugar company from Zambia and brewer in the Dominican Republic. The KPMG office in Bermuda is handling the liquidation of Millennium and the suit was filed by them. They are seeking $53 million in damages.

In its defense argument, Citi admits that it may have mispriced some of the trades, but that the positions were illiquid and hard to price under normal market conditions. Citi also claims that any mispricing was smaller than the damages being sought in the lawsuit.

Rick Pendergraft
Research Analyst
HedgeCoVest