Ex-Citi Bond Chiefs To Start Hedge Fund
June 23, 2008
Two former Citigroup bond chiefs plan to join the club of investment bankers turned hedge fund managers, according to a report from Reuters. But because the bank took on billions of dollars in bad positions on their watch, they could face quite a challenge doing so.
Randy Barker and Geoff Coley, two former heads of fixed income at Citi, are in the early stages of planning their fund, which will likely focus on distressed debt and other credit investment strategies, sources told the newswire.
Barker and Coley left Citi late last year, when the extent of the bank's credit problems first became known. The two led a group responsible for a significant part of more than $45 billion in losses, which the bank has written down over the last three quarters.
An individual's culpability for losses at an institution can be difficult to determine. However, Barker and Coley will have to assuage investors that their fund won't post losses similar to those at Citi, sources told Reuters.
"Investors will have to develop comfort that Citi's woes were not caused primarily by these peoples' decisions," said Ron Geffner, a partner at law firm Sadis & Goldberg, which works with many new managers.
Barker and Coley are looking to hire traders and other employees and have had early conversations with potential investors.
Meanwhile, competition in the hedge fund world is heating up, as layoffs and sagging incomes cause an increasing number of investment bankers to consider the option. A number of Goldman Sachs employees are also trying to set up funds, a person familiar with their plans told Reuters.
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