Although Legg Mason and Citigroup had originally set Nov. 1 as the date for swapping their respective brokerage and mutual fund businesses, a deal worth a total of $3.7 billion, in light of some resistance from mutual fund shareholders and management complications, the companies now do not anticipate completing it until December, Knight Ridder reports.

In the interim, the companies are planning to hold a mutual fund shareholder meeting in New York this Friday, to try and convince investors of new management agreements in connection with Legg Mason's assumption of $437 billion in assets from Citigroup in exchange for its brokerage business.

Legg Mason Chairman and CEO Raymond A. "Chip" Mason sent an e-mail to employees last week saying "the primary issue has been the voting of the mutual funds." Citigroup, meanwhile, is pointing to structural challenges. "This is a very complex transaction," Citigroup spokeswoman Mary Athridge told Knight Ridder. "You're not just talking about mutual funds. The brokers are going to Smith Barney. There are a lot of moving parts. It's a lot of detail."

Meanwhile, six of the 200 Citigroup funds are closed-end funds whose shareholders are unhappy with the discount at which the funds are trading, and shareholders of these funds are hoping to use the transfer proxy vote as an opportunity to voice their opposition in order to force Citigroup to narrow the discount.

Cody Bartlett, a portfolio manager at Karpus Investment Management, a registered investment advisor that owns 7% of two of the Citigroup funds, said shareholders are hoping to block the proxy transfer vote either by voting no or preventing the firms from achieving the necessary 50% voting quorum.

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