Tuesday, 1 December 2015
Last updated 2 hours ago
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.
Oct 21 2015 | 10:41am ET
One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…