Citadel Investment Group
Encyclopedia
Citadel LLC is a global financial institution based in Chicago
, Illinois
. Founded in 1990 by Kenneth C. Griffin
, the firm today deploys capital across multiple asset classes and strategies. Current activities also include equity
and option
s market-making.
(AUM) and was one of the world's largest hedge fund
managers.
Fitch stated that they are "concerned that the recent performance of Kensington and Wellington and future challenges to the broader market may increase redemption requests in 2008 and into 2009, eroding the funds' capital cushion". Despite this concern, Fitch analysts also noted that “Citadel will be a long term survivor of this market shakeout given its innovation in funding and expansion into businesses that move beyond asset management.”
Also in October 2008, S&P lowered the outlook for Citadel's Kensington and Wellington Funds from 'stable' to 'negative', citing a 'heightened risk of significant redemptions, challenging performance prospects due to highly volatile capital markets and a very difficult funding environment'.
On November 18, 2008, S&P downgraded the counterparty rating for its Kensington Global and Wellington hedge funds to BBB/A-3 from BBB+, reflecting the investment losses from September and October. However, the agency did note that “Redemptions for the quarter ending December 2008 are reported to be less than 10 percent of investment capital of the funds and sources of borrowing are still diversified”.
On December 4, 2008, the Wall Street Journal revealed that the largest Citadel funds lost 13 percent in November, bringing the losses for the year to 47 percent. By comparison the Hedge Fund Research HFRX US Global Hedge Fund Index is down 22 per cent this year. Losses came from positions in convertible bonds, bank loans and investment grade bonds. Citadel rebounded from its 2008 losses to post a $5 billion profit through November 2009.
, New York
, Hong Kong
and San Francisco. Additionally, the firm's Citadel Securities businesses execute and route more than 30 percent of average US listed equity options trading volume and more than 8 percent of average NASDAQ and NYSE equities volume.
An April 2005 Bloomberg news article noted that David Shaw's D.E. Shaw & Co., which then had $14.7 billion in assets under management, and Tudor Investment Corporation both had less than half as many employees as Citadel does. It stated that unlike most other hedge funds where investors are charged a flat management fee of 1-2 percent of assets and 20 percent of profits, the investors that invest in hedge funds managed by Citadel bear the entire cost of running the company, a bill that historically has equaled 3-6 percent of assets for the computer systems and larger-than-average staff. Morgan Creeks' Yusko was quoted as saying "Their expense structure is high compared with others. Ultimately, we overlooked it because their returns were so high."
It was reported in 2008 during the financial crisis that the funds were down 50%. At this time Citadel announced that they would cover a large portion of that years operating expenses.
announced they had received SEC approval to launch a joint clearing
and exchange solution for the $43 trillion credit default swap
(CDS) market, called the Credit Market Derivatives Exchange, or CMDX. In addition to improving transparency, the exchange offers immediate confirmation of trades, avoiding the operational risks associated with unconfirmed CDS transactions. In an interview Citadel's Ken Griffin and Craig Donahue, CEO of the CME Group, confirmed that the platform is up and ready and that interest has been high.
Credit default swaps play an important role in a company's risk management procedure, which has made CMDX a compelling solution as institutions seek "transparent, secure and liquid market alternatives,” said CME Group Executive Chairman Terry Duffy. The creation of the exchange was proposed as a solution to one of the many causes of the financial crisis of 2007–2010, as its transparency can provide regulators with immediate access to positions and trading information.
A 2005 Bloomberg interview noted that "[Griffin] keeps a row of management-theory books on a credenza behind his desk, and he says he tries to emulate one of America's most celebrated business leaders, former General Electric
Co. CEO Jack Welch
."
Griffin is the son of a former GE project manager.
Philip Halpern, former endowment manager of the University of Chicago
, stated "I like to see some broad experience set when I invest in managers. My concern is that Citadel doesn't have that. The turnover has been too high over the years."
Proud of Citadel’s growth, Griffin has stated, “The name Citadel means strength and it speaks to our culture of performance, risk management and our ability to succeed in volatility."
However, in November 2006 Citadel became the first hedge fund management company to issue bonds
. In a bond offering led by Lehman Brothers
and Goldman Sachs
, Citadel announced it would sell $2 billion worth of notes. The bonds have been given an investment-grade rating by Standard & Poor's
.
Citadel has repurchased approximately $200M of its debt on secondary markets since March 2008.
Citadel also has offices in New York
, Hong Kong
, San Francisco, Boston
, and London
Of the 100 largest hedge funds, Citadel's is the only one based in Chicago. Citadel is the eleventh largest hedge fund manager in the world; it is also the second largest multi-strategy hedge fund manager in the world.
In a 2005 interview with Harvard College Investment Magazine, Griffin had previously observed http://huangxin0624.spaces.live.com/Blog/cns!5F1C032EE5F47871!396.entry “I don’t think any industry has attracted as much capital over such a short period of time throughout history. With that much capital flowing into the business, it is reasonable to conclude that the prospect for better than market returns going forward is bleak.” He noted the same year that "We're subject to the same forces of capitalism that have built the entire American economy. Strong returns induce more capital flow, which creates more competitors, and you have to evolve and get better, or you die." http://www.redorbit.com/news/business/450295/citadel_boss_wont_be_hedging_on_day_job/
On December 8, 2008, Bloomberg News said that Citadel would be closing down its Tokyo Office and Asian principal investments operations, cutting more than half its jobs in the region and running its remaining Asian operations from Hong Kong.
Mr. Griffin has also recently said that the recent turmoil has created the best opportunities he's seen since he started trading roughly 20 years ago: "We're very excited about the positions in our portfolio in the months and years ahead.” Also, Mr. Griffin noted that “Citadel's market-making business has performed ‘spectacularly’ this year and will be a major growth driver for the firm in future”.
such as Kensington Global Strategies (Citadel's largest fund), Wellington Partners (Citadel's oldest fund and its flagship fund), Citadel Equity Fund, Citadel Finance http://today.reuters.com/news/articleinvesting.aspx?type=newIssuesNews&storyID=2006-12-07T225005Z_01_N07639959_RTRIDST_0_CITADEL-DEBT-NOTES-TABLE.XML, and Citadel Derivatives Group, which controls 10% of the Philadelphia Stock Exchange
http://select.nytimes.com/gst/abstract.html?res=FA0813FE3C5F0C758DDDAF0894DD404482&n=Top%2fReference%2fTimes%20Topics%2fOrganizations%2fC%2fCitadel. In 2000, Citadel's Wellington affiliate achieved a 52.6% return http://lhv.delfi.ee/images/files/griffin.pdf. Since January 2005, Citadel Derivatives Group has been a Lead Market Maker on the trading floor of the Pacific Coast Exchange http://press.arrivenet.com/business/article.php/464476.html. In a strategic partnership
with about ten other financial institutions, Citadel Derivatives Group is also a joint owner of the International Securities Exchange
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20061025005478&newsLang=en.
In 2006, Citadel and JPMorgan Chase acquired the energy portfolio of the failed hedge fund Amaranth Advisors
, which had suffered a 65% ($6 billion) loss in assets http://www.sciencedaily.com/upi/index.php?feed=Business&article=UPI-1-20060921-07292100-bc-us-amaranth.xml http://www.bloomberg.com/apps/news?pid=20601103&sid=aKNAB7Io8Pyc&refer=news.
In 2007, Citadel acquired a sizable stake in online brokerage E*TRADE https://investor.etrade.com/releasedetail.cfm?ReleaseID=279066. A Bloomberg News story on 5 September 2008 reported that Joe Russell, a Citadel senior managing director who led the negotiations to acquire E*Trade left after his division suffered losses on the year. Citadel acquisition of E*Trade was announced when its shares were trading at $4.82.
On June 2, 2010 E*TRADE had a one for ten reverse split, based on the current stock,
$4.82 would equal $48.20 per current share.
A Reuters story on November 21, 2008 reported that E*Trade's continued existence would likely depend on whether it received funds from the US Treasury under the Troubled Asset Relief Program (TARP). Its shares traded at 87 cents, down approximately 84% from the time Citadel acquired its $2.55 billion stake implying a possible loss of as much as $2.14 billion for Citadel on its equity stake. No figure is publicly available for any losses on the credit portfolio purchased from E*Trade at the time of the acquisition.
-based catastrophe reinsurer
. In 2005, the hedge fund founded a $500 million catastrophe reinsurer in Bermuda called New Castle Re.
Subsequently, in 2009, Citadel sold New Castle Re and CIG Re and exited the reinsurance industry.
Rating agency [A. M. Best] has placed its A- rating of Citadel-owned insurer New Castle Re's under review, given "continued deterioration faced by their primary investors, Citadel Kensington Global Strategies Fund Ltd. and Citadel Wellington LLC" New Castle Re was closed in 2009, when Citadel exited the reinsurance industry.
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
. Founded in 1990 by Kenneth C. Griffin
Kenneth C. Griffin
Kenneth C. Griffin is an American hedge fund manager. He is the founder and CEO of Citadel LLC, a Chicago-based investment firm...
, the firm today deploys capital across multiple asset classes and strategies. Current activities also include equity
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
and option
Option (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...
s market-making.
Citadel Asset Management (Hedge Fund)
Citadel Asset Management manages $11bn in assets under managementAssets under management
Assets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
(AUM) and was one of the world's largest hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
managers.
Kensington and Wellington Funds
On October 31, 2008 Fitch Ratings downgraded the Issuer Default Ratings and senior debt ratings of Citadel's Kensington Global Strategies Fund, Citadel Wellington LLC and Citadel Finance LLC, placing the ratings on Rating Watch Negative pending notification of redemptions.Fitch stated that they are "concerned that the recent performance of Kensington and Wellington and future challenges to the broader market may increase redemption requests in 2008 and into 2009, eroding the funds' capital cushion". Despite this concern, Fitch analysts also noted that “Citadel will be a long term survivor of this market shakeout given its innovation in funding and expansion into businesses that move beyond asset management.”
Also in October 2008, S&P lowered the outlook for Citadel's Kensington and Wellington Funds from 'stable' to 'negative', citing a 'heightened risk of significant redemptions, challenging performance prospects due to highly volatile capital markets and a very difficult funding environment'.
On November 18, 2008, S&P downgraded the counterparty rating for its Kensington Global and Wellington hedge funds to BBB/A-3 from BBB+, reflecting the investment losses from September and October. However, the agency did note that “Redemptions for the quarter ending December 2008 are reported to be less than 10 percent of investment capital of the funds and sources of borrowing are still diversified”.
On December 4, 2008, the Wall Street Journal revealed that the largest Citadel funds lost 13 percent in November, bringing the losses for the year to 47 percent. By comparison the Hedge Fund Research HFRX US Global Hedge Fund Index is down 22 per cent this year. Losses came from positions in convertible bonds, bank loans and investment grade bonds. Citadel rebounded from its 2008 losses to post a $5 billion profit through November 2009.
Market Making
Its daily trading volume amounts to approximately 3 percent of average daily trading activity in LondonLondon
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
and San Francisco. Additionally, the firm's Citadel Securities businesses execute and route more than 30 percent of average US listed equity options trading volume and more than 8 percent of average NASDAQ and NYSE equities volume.
An April 2005 Bloomberg news article noted that David Shaw's D.E. Shaw & Co., which then had $14.7 billion in assets under management, and Tudor Investment Corporation both had less than half as many employees as Citadel does. It stated that unlike most other hedge funds where investors are charged a flat management fee of 1-2 percent of assets and 20 percent of profits, the investors that invest in hedge funds managed by Citadel bear the entire cost of running the company, a bill that historically has equaled 3-6 percent of assets for the computer systems and larger-than-average staff. Morgan Creeks' Yusko was quoted as saying "Their expense structure is high compared with others. Ultimately, we overlooked it because their returns were so high."
It was reported in 2008 during the financial crisis that the funds were down 50%. At this time Citadel announced that they would cover a large portion of that years operating expenses.
Citadel Securities
Citadel Securities was established in 2002. It consists of a sales and trading platform, and an industry leading market making franchise.Credit Market Derivatives Exchange
In March 2009, Citadel and the CME GroupCME Group
The CME Group bases prices for US gasoline on Brent Crude rather than West Texas Intermediate Crude , which many believe is responsible for artificially high gas prices for US consumers...
announced they had received SEC approval to launch a joint clearing
Clearing house (finance)
A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions...
and exchange solution for the $43 trillion credit default swap
Credit default swap
A credit default swap is similar to a traditional insurance policy, in as much as it obliges the seller of the CDS to compensate the buyer in the event of loan default...
(CDS) market, called the Credit Market Derivatives Exchange, or CMDX. In addition to improving transparency, the exchange offers immediate confirmation of trades, avoiding the operational risks associated with unconfirmed CDS transactions. In an interview Citadel's Ken Griffin and Craig Donahue, CEO of the CME Group, confirmed that the platform is up and ready and that interest has been high.
Credit default swaps play an important role in a company's risk management procedure, which has made CMDX a compelling solution as institutions seek "transparent, secure and liquid market alternatives,” said CME Group Executive Chairman Terry Duffy. The creation of the exchange was proposed as a solution to one of the many causes of the financial crisis of 2007–2010, as its transparency can provide regulators with immediate access to positions and trading information.
Corporate culture
The local press has called Citadel "Chicago's revolving door". (People close to the firm say turnover is on a par with a typical investment bank's.) Commenting on this reputation, Mr. Griffin has said, “People say...’It’s a tough place to work. It’s demanding. It’s unrelenting.’ I look at these as strengths inherent in strong companies... I’m very proud that we have a sterling reputation when it comes to doing what we say we’re going to do.” Mike Pyles, former Head of Human Resources at Citadel stated that "When the markets change, we don't accept lower returns. We aren't that kind of firm. We expect the manager to go and figure out how to make money in the new market. We make no apology for it."A 2005 Bloomberg interview noted that "[Griffin] keeps a row of management-theory books on a credenza behind his desk, and he says he tries to emulate one of America's most celebrated business leaders, former General Electric
General Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
Co. CEO Jack Welch
Jack Welch
John Francis "Jack" Welch, Jr. is an American chemical engineer, business executive, and author. He was Chairman and CEO of General Electric between 1981 and 2001...
."
Griffin is the son of a former GE project manager.
Philip Halpern, former endowment manager of the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
, stated "I like to see some broad experience set when I invest in managers. My concern is that Citadel doesn't have that. The turnover has been too high over the years."
Proud of Citadel’s growth, Griffin has stated, “The name Citadel means strength and it speaks to our culture of performance, risk management and our ability to succeed in volatility."
Ownership and financing
Despite prior talk in Wall Street that Citadel was considering an IPO and that Mr. Griffin mentioned the possibility in an interview, in April 2006, a spokesperson for Citadel said the firm currently has no such plans.However, in November 2006 Citadel became the first hedge fund management company to issue bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
. In a bond offering led by Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
and Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, Citadel announced it would sell $2 billion worth of notes. The bonds have been given an investment-grade rating by Standard & Poor's
Standard & Poor's
Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
.
Citadel has repurchased approximately $200M of its debt on secondary markets since March 2008.
Offices
Although Citadel employs over 1,400 individuals globally, its flagship operation is located in the Citadel Center a $355m office tower in the heart of downtown Chicago; in 2006 the tower was purchased for $560m by Robert Gans.Citadel also has offices in New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
, San Francisco, Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
, and London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
Of the 100 largest hedge funds, Citadel's is the only one based in Chicago. Citadel is the eleventh largest hedge fund manager in the world; it is also the second largest multi-strategy hedge fund manager in the world.
2005-2008 developments
A 2006 report from Dresdner Kleinwort Benson raised concerns that hedge funds could pose systemic risk to the financial markets, using Citadel's disclosed information as a case study and stating that "at face value, and without being able to look into the black box, the balance sheet of today’s Citadel hedge fund looks quite similar to LTCM."In a 2005 interview with Harvard College Investment Magazine, Griffin had previously observed http://huangxin0624.spaces.live.com/Blog/cns!5F1C032EE5F47871!396.entry “I don’t think any industry has attracted as much capital over such a short period of time throughout history. With that much capital flowing into the business, it is reasonable to conclude that the prospect for better than market returns going forward is bleak.” He noted the same year that "We're subject to the same forces of capitalism that have built the entire American economy. Strong returns induce more capital flow, which creates more competitors, and you have to evolve and get better, or you die." http://www.redorbit.com/news/business/450295/citadel_boss_wont_be_hedging_on_day_job/
On December 8, 2008, Bloomberg News said that Citadel would be closing down its Tokyo Office and Asian principal investments operations, cutting more than half its jobs in the region and running its remaining Asian operations from Hong Kong.
Mr. Griffin has also recently said that the recent turmoil has created the best opportunities he's seen since he started trading roughly 20 years ago: "We're very excited about the positions in our portfolio in the months and years ahead.” Also, Mr. Griffin noted that “Citadel's market-making business has performed ‘spectacularly’ this year and will be a major growth driver for the firm in future”.
Investments
Citadel also has multiple subsidiariesSubsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
such as Kensington Global Strategies (Citadel's largest fund), Wellington Partners (Citadel's oldest fund and its flagship fund), Citadel Equity Fund, Citadel Finance http://today.reuters.com/news/articleinvesting.aspx?type=newIssuesNews&storyID=2006-12-07T225005Z_01_N07639959_RTRIDST_0_CITADEL-DEBT-NOTES-TABLE.XML, and Citadel Derivatives Group, which controls 10% of the Philadelphia Stock Exchange
Philadelphia Stock Exchange
Philadelphia Stock Exchange , now known as NASDAQ OMX PHLX, is the oldest stock exchange in the United States, founded in 1790. It is now owned by NASDAQ OMX and located at 1900 Market Street, in Center City Philadelphia.-History:...
http://select.nytimes.com/gst/abstract.html?res=FA0813FE3C5F0C758DDDAF0894DD404482&n=Top%2fReference%2fTimes%20Topics%2fOrganizations%2fC%2fCitadel. In 2000, Citadel's Wellington affiliate achieved a 52.6% return http://lhv.delfi.ee/images/files/griffin.pdf. Since January 2005, Citadel Derivatives Group has been a Lead Market Maker on the trading floor of the Pacific Coast Exchange http://press.arrivenet.com/business/article.php/464476.html. In a strategic partnership
Strategic partnership
A strategic partnership is a formal alliance between two commercial enterprises, usually formalized by one or more business contracts but falls short of forming a legal partnership or, agency, or corporate affiliate relationship....
with about ten other financial institutions, Citadel Derivatives Group is also a joint owner of the International Securities Exchange
International Securities Exchange
International Securities Exchange Holdings, Inc. is a wholly owned subsidiary of German derivatives exchange Eurex. It is a member of the Options Clearing Corporation and the Options Industry Council . Historically, responsibility for organizing the Options Industry Conference is rotated amongst...
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20061025005478&newsLang=en.
In 2006, Citadel and JPMorgan Chase acquired the energy portfolio of the failed hedge fund Amaranth Advisors
Amaranth Advisors
Amaranth Advisors LLC was an American investment adviser managing multi-strategy hedge fund founded by Nicholas Maounis and headquartered in Greenwich, Connecticut. The firm had up to $9 billion in assets under management and collapsed in September 2006 after losing in excess of $5 billion on...
, which had suffered a 65% ($6 billion) loss in assets http://www.sciencedaily.com/upi/index.php?feed=Business&article=UPI-1-20060921-07292100-bc-us-amaranth.xml http://www.bloomberg.com/apps/news?pid=20601103&sid=aKNAB7Io8Pyc&refer=news.
In 2007, Citadel acquired a sizable stake in online brokerage E*TRADE https://investor.etrade.com/releasedetail.cfm?ReleaseID=279066. A Bloomberg News story on 5 September 2008 reported that Joe Russell, a Citadel senior managing director who led the negotiations to acquire E*Trade left after his division suffered losses on the year. Citadel acquisition of E*Trade was announced when its shares were trading at $4.82.
On June 2, 2010 E*TRADE had a one for ten reverse split, based on the current stock,
$4.82 would equal $48.20 per current share.
A Reuters story on November 21, 2008 reported that E*Trade's continued existence would likely depend on whether it received funds from the US Treasury under the Troubled Asset Relief Program (TARP). Its shares traded at 87 cents, down approximately 84% from the time Citadel acquired its $2.55 billion stake implying a possible loss of as much as $2.14 billion for Citadel on its equity stake. No figure is publicly available for any losses on the credit portfolio purchased from E*Trade at the time of the acquisition.
Hedge Fund Administration
In October 2008, Citadel named Rohit D’Souza as CEO for the firm’s growing capital markets business. The capital markets platform also includes Citadel Solutions, a hedge fund administration business launched in 2007 that serves hedge funds with a total of more than $30 billion in assets under administration. In 2009, Citadel Solutions’ name was changed to Omnium LLC and in 2011 Omnium was sold to Northern Trust.Investment banking
D'Souza left the firm in October, 2009, and Todd Kaplan, former head of investment bank, left in January, 2010. In August, 2011, the whole three-year investment banking initiative was reportedly being liquidated, with the possible sale of parts of the business.Fusion fund of funds
On October 30, 2008, it was announced that Citadel is winding down its $1 billion Fusion fund of funds, and has reallocated these assets to emerging hedge fund managers.New Castle Re
In 2004, Citadel founded CIG Re, a BermudaBermuda
Bermuda is a British overseas territory in the North Atlantic Ocean. Located off the east coast of the United States, its nearest landmass is Cape Hatteras, North Carolina, about to the west-northwest. It is about south of Halifax, Nova Scotia, Canada, and northeast of Miami, Florida...
-based catastrophe reinsurer
Reinsurance
Reinsurance is insurance that is purchased by an insurance company from another insurance company as a means of risk management...
. In 2005, the hedge fund founded a $500 million catastrophe reinsurer in Bermuda called New Castle Re.
Subsequently, in 2009, Citadel sold New Castle Re and CIG Re and exited the reinsurance industry.
Rating agency [A. M. Best] has placed its A- rating of Citadel-owned insurer New Castle Re's under review, given "continued deterioration faced by their primary investors, Citadel Kensington Global Strategies Fund Ltd. and Citadel Wellington LLC" New Castle Re was closed in 2009, when Citadel exited the reinsurance industry.
Other information
Citadel LLC is not related to any of the following organizations:- Citadel Equipment Finance, Equipment Financing and Leasing
- Citadel Investment Services, a South AfricaSouth AfricaThe Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
-based wealth managementWealth managementWealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services...
group - Citadel Group, a global financial services firm
- Citadel Investments, a New York based mortgage broker
- Citadel Group, a Chicago based healthcare financing organization