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Citigroup blocks withdrawals from a hedge fund

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A number of investors have tried to take money out of a hedge fund operated by Citigourp (NYSE: C). The fund make investments in corporate bonds. According to The Wall Street Jounal (subscription required), the bank "suspended redemptions in CSO Partners, a fund specializing in corporate debt, after investors tried to yank more than 30% of the fund's roughly $500 million in assets." Citigroup has had to put $100 million into the unit.

While the problem with this hedge fund is fairly modest in financial terms, it raises the question of how many other hedge funds the company may have to bail out. Does the bank have to put in another $1 billion to rescue these operations if they run into trouble? Or, could the number be larger than that.

Citigroup already faces skeptical investors who want to know how much more the bank may have to write-down for subprime mortgage instruments this year. Now Wall Street has the additional anxiety of problems at the company's hedge funds.

Douglas A. McIntyre is an editor at 247wallst.com.

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Last updated: November 26, 2009: 05:18 AM

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