Report: Citi blocks hedge fund withdrawalsFund specializing in corporate debt had investors trying to take out more than 30% of its $500 million in assets, newspaper says.Video
NEW YORK (CNNMoney.com) -- Citigroup is blocking investors from withdrawing their money from a hedge fund specializing in government debt after a near run on its assets, according to a published report. The Wall Street Journal reports that Citigroup (C, Fortune 500) made the move to bar withdrawals from its CSO Partners fund after investors attempted to pull out more than 30% of the fund's roughly $500 million in assets. The fund posted an 11% loss last year, according to the paper. The paper reports that in an effort to stabilize the fund last month Citigroup injected $100 million. The paper also reports that alternative investment products such as hedge funds are a relatively small business for Citigroup, which has about $2.4 trillion in assets. But it's another unneeded problem for Citi as it tries to shake off losses from other investments, primarily those tied to subprime mortgages. A month ago it reported a record $10 billion loss in the fourth quarter after it was forced to take an $18 billion writedown. The loss led to the departure of Chairman and CEO Charles Prince. His replacement, Vikram Pandit, had been a hedge fund manager who briefly ran the alternative-investments group at Citi. Shares of Dow component Citigroup lost 1.1% in early Frankfurt trading Friday on the report. |
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