Citi Stops Withdrawals From CSO Partners Fund

The troubles continue for Citigroup’s alternative investment arm, with its CSO Partners barring investors from withdrawing money from the hedge fund.

“We have temporarily suspended redemptions of all shares of CSO to stabilize the fund and allow time to address its funding needs to meet anticipated obligations," says Jon Diat, spokesman for Citi, in an email statement to IDD. “All (Citigroup Alternative Investments) funds are subject to comprehensive internal fiduciary risk oversight, risk management practices and senior level management supervision.”

The single-manager fund, launched in 2004 and specializing in credit-oriented and event-driven strategies, suspended redemptions after investors tried to pull more than 30% of the fund’s roughly $500 million in assets, according to the Wall Street Journal. The fund had losses of 11% last year, and Citi infused $100 million last month.

Last December, manager John Pickett left over reported differences about his putting a large sum of money in one investment that went bad.

Citi’s $2.4 trillion alternative-investment division, which CEO Vikram Pandit once ran, has other hedge funds that are posting mediocre performance. Falcon Plus Strategies posted a 30% decline last year, and lost 52% in the fourth quarter alone after placing bad bets on mortgage-backed and preferred securities. Old Lane Partners, which was founded by Pandit and acquired by Citi last had a loss of 1.8% last month.