Citadel Fund Administration Arm Wins Lehman Mandate

Aug 28 2009 | 9:20am ET

Citadel Investment Group’s fund administration business has landed its biggest client to date, in something of a coming-out party for the soon-to-be-renamed business.

A bankruptcy court judge gave the bankrupt investment bank the go-ahead to appoint Citadel Solutions as its asset administrator in the U.S. The deal nearly triples the amount of assets under administration at Citadel Solutions, which is being renamed Omnium to distance it from its hedge fund parent, with Lehman contributing as much as $50 billion in complex assets.

Citadel Solutions/Omnium will process and administer Lehman’s billions as the bank continues to be liquidated. Many of the holdings require daily attention, including hedging; some are of the difficult-to-value variety that helped bring down one of Wall Street’s oldest names.

Citadel—which this week avoided an unpleasant situation by ridding itself of most of its $470 million bankruptcy claim against Lehman—is changing its administrators name as it seeks to become a bigger player in that area. Prior to the Lehman get, the firm had just 32 clients. Citadel itself was its largest client. Other firms reportedly balked at associating so closely with the Citadel name, although the firm insists the two operations are run completely separately, and some Citadel clients, pushing for third-party administration, have expressed misgivings.

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