A Financial Industry Regulatory Authority arbitration panel has ruled against The Police and Fire Retirement System of the City of Detroit, which was seeking at least $39.9 million from Citigroup Global Markets, Morgan Stanley Dean Witter and other firms over risky investments.

Lawyers for the retirement system and the firms either declined or could not be reached for comment. The decision comes as the retirement system is battling to protect pension benefits in Detroit’s bankruptcy proceedings.

But according to an arbitration document dated Sept. 18, the majority-public, three-member arbitration panel dismissed the retirement system’s claims against the firms and ordered it to pay at least $32,250 in hearing, adjournment and other fees.

The order stems from a complaint the retirement system filed on May 10, 2010 charging the firms with fraud, misrepresentation and breach of contract for recommending it invest in various collateralized debt obligation funds,

The retirement system claimed the firms misrepresented the nature of the investments.

It asked for $39.9 million in actual compensatory damages and an additional unspecified amount in punitive damages plus interest.

But the panel dismissed the claims, saying it “found a lack of material misrepresentation, no failure to disclose conflict and no fiduciary liability on the part of” the firms. The retirement system urged the panel to reconsider its decision, but the panel declined to do so.

The parties agreed to the so-called award and agreed to share fees, but the panel assigned the retirement system $2,400 of adjournment fees and $28,050 of hearing session fees, as well as a $1,800 initial claim filing fee.

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