Two US hedge fund managers are planning to sue a group of investors who allegedly breached their fiduciaries duties when they invested in an investment fund owned by one of them.

Investors Hangout: The Hedge Fund Industry, published by the US investment bank Citigroup, claims that one of the hedge fund’s employees was in a position to know the value of the fund’s securities, and that one hedge fund manager breached his fiduciarial duties by failing to disclose that information.

The company alleges that it has filed a civil lawsuit against the hedge funds, which it says have committed a series of violations.

The suit seeks an injunction to prohibit them from acting as investment advisors, which the firm says constitutes an act of “willful misconduct”.

The lawsuit, filed on Friday, comes as regulators have been grappling with a surge in institutional funds, as well as hedge funds.

A number of hedge funds have gone public in recent months, raising billions of dollars in capital.

The rise of institutional funds has led to questions about whether they have breached fiduciarily duty, and whether their actions might have helped their investors.

In December, a US regulator ordered that hedge funds with more than $2bn in assets under management be subject to the new fiduciiary duty rules, but the government has yet to finalise that order.

The new rules come into force on February 18.

Citigroup’s suit alleges that the hedge-fund manager in question, Anthony Dorn, who works at a New York hedge fund, knew about the fund, but did not disclose it.”

It is not a violation of fiducial duty for the firm to have an investment adviser or to have any knowledge of an investment’s valuation.”

Citigroup’s suit alleges that the hedge-fund manager in question, Anthony Dorn, who works at a New York hedge fund, knew about the fund, but did not disclose it.

Dorn, the suit alleges, did not report the fund to his manager, but instead used his position to recommend investments in the fund.

Citibrans lawsuit alleges that in October, Dorn asked to see a copy of the investment-manager agreement.

According to the suit, Dorne, who was a member of a board of directors at the hedgefund, “requested to see the [investment-manager] agreement and signed it without reading the full text of the agreement”.

Dorn allegedly failed to disclose this, the lawsuit alleges, because he was “too busy with the hedge Fund”.

According to Citigroup’s complaint, Dorns actions constituted a breach of his fiducious duty to disclose his investment advice.

The company said that Dorn breached his duty by failing “to disclose that he was aware that the fund was trading at a lower price and that he had made a recommendation to that effect, which, if true, would be a violation [of] his fidutial duty”.

Citibank says that Dorns conduct violated his fiduious duty by “knowingly failing to properly disclose that the investment was trading below its fair market value and by failing ‘to communicate with the investment advisor, who in turn communicated with the fund management company”.

The firm’s suit seeks unspecified damages.

In the past, the firm has said that it would seek to recover fees for lost commissions and commissions that were not recovered by the hedge firm.

In April, Citibank’s attorney general, Preet Bharara, announced that the Department of Justice (DOJ) was investigating two hedge funds after a report by the Wall Street Journal and other media outlets showed that the firms had engaged in misconduct.

The DOJ launched a criminal investigation into Citigroup in May and said that its top regulator, the Commodities Futures Trading Commission, would investigate the two firms.

Investment-management firms have long been scrutinised by regulators in the US for how they handle investment advice, and are required to follow certain guidelines.

These include ensuring that their investment advice is accurate and that they do not act to influence their clients’ investment decisions.