Citigroup Barrs Investors From Selling Their Hedge Fund Shares
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|Citigroup has barred investors in one of its hedge funds from withdrawing their money, and a new leveraged fund lost 52 percent in its first three months, the Wall Street Journal reported Friday.
The largest U.S. bank suspended redemptions in CSO Partners, a fund specializing in corporate debt, after investors tried to pull more than 30 percent of its roughly $500 million of assets, the newspaper said. Citigroup injected $100 million to stabilize the fund, which lost 10.9 percent last year, the newspaper said.
The fund's manager, John Pickett, left following a dispute with Citigroup executives and complaints from investors after he tried to back out from committing more than half the fund's assets to buy leveraged loans tied to a German media company, the newspaper said. That matter was settled when CSO agreed to buy $746 million of the loans at face value, though they were trading at 86 percent to 93 percent of face value, it said.
Since June, Citigroup has disclosed some $30 billion of write-downs and losses tied to subprime mortgages, complex debt and deteriorating credit. The problems contributed to a record 9.83 billion fourth-quarter loss. Profit that quarter in the alternative investments unit fell 89 percent to $61 million.