Bank Platforms Put Brakes On Paulson Flows

May 24 2012 | 1:18pm ET

Despite his recent run of dismal performance, John Paulson has enjoyed a steady stream of new cash from bank hedge-fund platforms.

But that flow will trickle to a drip after two banks put Paulson's hedge fund on watch.

Citigroup and Morgan Stanley, whose clients have some $500 million invested with Paulson & Co., added the $24 billion New York-based hedge fund to their "watch" lists, the New York Post reports. Funds on watch can't get any money for at least three months.

Neither bank has explained its move. Paulson's flagship funds, which lost between 30% and 50% last year, are down in the high double-digits this year, and one-fifth of the firm's investors remain below their high water-mark.

Paulson added his funds to the bank platforms after he soared to prominence in 2007.

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