Citigroup's request to overturn a $54.1-million arbitration ruling in favor of a group of investors for losses incurred in a series of municipal bond funds which plunged in value between 2007 and 2008 has been denied by  U.S. Judge Judge Christine Arguello in Denver, Colorado.  Judge Arguello disagreed with Citigroup's arguments, including the latter's assertion that a FINRA arbitration panel disregarded the law in its award, in April, to venture capital investor Jerry Murdock Jr., retired patent attorney Gerald D. Hosier, and Brush Creek Capital.  She ruled that the FINRA panel wasn't wrong to award the investors punitive damages and legal fees. Citigroup sold a series of funds through an entity called MAT Finance LLC. The MAT, or municipal arbitrage trust funds, borrowed at low short-term rates and invested proceeds in longer-term muni bonds. But the strategy was ultimately shown to be flawed and left investors with losses of as much as 80 percent. Citigroup had argued to the court, after the FINRA panel made its ruling in April, that the investors could not have relied on certain oral statements that the firm made about their purchases, because they had signed agreements which disclosed that they could lose all of their money. The $54.1 million securities arbitration award was among the largest that a brokerage firm has had to pay individual investors, according to the Securities Arbitration Commentator Inc., a newsletter in Maplewood, N.J. The investors' losses were tied to six different leveraged municipal bond arbitrage funds sold by Citigroup Global Markets. Of the total award, the FINRA panel ruled that Citi must pay nearly $34.1 million in compensatory damages, $17 million in punitive damages, and $3 million in legal fees. [Reuters 12/22/11]