Citadel Mortgage Fund Closed After Manager Quits

Mar 31 2011 | 3:08am ET

Citadel Investment Group is liquidating a residential mortgage hedge fund in the wake of its manager's exit.

The Chicago-based hedge fund giant is closing the $200 million fund less than a year after it debuted in June, Bloomberg News reports. But some investors, spooked by the March 7 resignation of manager Bill King, told the firm they would redeem their investments, leading Citadel to pull the plug.

The firm, which has $11 billion in assets, may also shutter a $100 million offshore version of King's former fund. The fund is up about 9% since inception.

King, who worked at Citadel for about three years, quit after the firm named Glenn Perillo, a close associate of Citadel founder Kenneth Griffin, co-manager of the mortgage funds. Perillo will continue to manage a $700 million separate account employing the strategy for a sovereign wealth fund.

Griffin and Perillo worked together on Citadel's investment in troubled online brokerage E*Trade Financial Corp.


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