(CN) – A group of high net worth investors received a fair settlement from a failed municipal bond fund backed by Citigroup, the Delaware Court of Chancery ruled.
The Marie Raymond Revocable Trust sued MAT Five LLC for breach of fiduciary duty and securities law violations after the fund became insolvent.
The weakening of the credit market last year led to Citigroup adding $246 million to keep the fund afloat. MAT Five began a tender offer to acquire its shares. The investors responded with the lawsuit, claiming the offer was unfair and that MAT Five did not disclose all material facts to them.
The parties entered settlement talks, and MAT Five sweetened the original tender offer with additional disclosures, money and options.
Vice Chancellor Lamb ruled that the settlement is fair and reasonable.
“In light of the continued extreme volatility in the volatility in the nation’s credit markets,” Lamb wrote, “it is apparent that MAT Five investors should be free to choose … whether to accept the amended tender offer or pursue other remedies against the defendants. Accordingly, the proposed settlement will be approved.”