Citi Sues Hedge Fund Manager For Gold Loss

Jan 4 2012 | 11:13am ET

Citigroup has sued a hedge fund manager linked with 3 Degrees Asset Management over a US$1 million shortfall suffered after it liquidated his gold account.

According to the bank, Raghavendran Rajaraman used a US$20 million credit line with the bank to finance his investments in gold just as the precious metal began a precipitous decline. When gold fell by almost US$100 per ounce on Sept. 26, "the margin level under the account deteriorated to the 'forced sell' level deemed by the bank," Citi said.

So the bank sold more than half of Rajaraman's gold, and then the rest under a stop-loss order. It also liquidated another US$1.7 million in gold held as collateral.

Even after the sale, Citi was left with a loss of US$1.03 million, it said. It is seeking that amount plus interest.

Citi's Singapore unit filed the suit in the city-state in November.

Rajaraman has not formally responded to the complaint. But in an October letter to Citi, his lawyers accused Citi of breaching their agreement, leading more than US$2.7 million in losses. Rajaraman's lawyers said that Citi failed to wait 24 hours after the account reached the force-sell level as required.

A preliminary hearing is scheduled for Jan. 27.

Rajaraman, a former Citi currency options trader, works with 3 Degrees, according to the Citi lawsuit. But he is not an employee of the hedge fund, it said.

"There was a plan to launch a fund together, but it never came to fruition," 3 Degrees founder Mohamed Ibrahim told Bloomberg News.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

The healthcare sector went on a tear beginning in 2011, thanks in large part to the passage of the Affordable Care Act and its impending implementat