SEC probes Citi funds after Smith Barney brokers' protests

The U.S. Securities and Exchange Commission is investigating whether Citigroup Inc. misled investors about the riskiness of some soured debt funds, the Wall Street Journal reported, citing unidentified people familiar with the matter. Former brokers at Citigroup's Smith Barney unit made the allegations and were subsequently subpoenaed by the SEC, the Journal said. They left the company after disagreements over how the funds, including MAT Finance LLC and Falcon, were handled, the newspaper said. The funds invested in municipal bond and mortgage debt, using borrowed money. Citigroup said it didn't mislead investors, the Journal said. The SEC and a lawyer for the brokers declined to comment.