HONG KONG (Reuters) – U.S. hedge fund giant Citadel Investment Group LLC, which has racked up hefty losses this year, is closing its Tokyo office and its Asia principal investment operations by the end of this year, media reports said on Monday.
As a result of the cutbacks, 25 people will be laid off in Hong Kong and 12 in Tokyo, and the firm’s Asian business will be run entirely out of Hong Kong, Dow Jones Newswires and Bloomberg reported, citing company spokeswoman Katie Spring.
Citadel officials in Hong Kong and Tokyo and at its Chicago headquarters could not immediately be reached for comment. The firm employs more than 1,200 people, according to its Website.
Citadel, which managed roughly $18 billion as of a month ago, lost about 13 percent in November, bringing its full-year loss to 47 percent, investors told Reuters last week.
Founded by legendary hedge fund manager Kenneth Griffin, Citadel had enjoyed one of the industry’s longest winning records, and its performance this year underscores the harsh times plaguing a once high-flying industry.
Since January, the average hedge fund, which lured investors with promises of big returns in all markets, has shed about 18 percent, according to data from Hedge Fund Research, a Chicago firm that tracks industry performance and asset flows.
In October, hedge fund assets shrivelled 9 percent to $1.5 trillion, their lowest in two years, as stock markets tumbled and investors withdrew a record $40 billion, Hedge Fund Research data show.
In another blow, the U.S. bankruptcy trustee for cash management firm Sentinel Management Group Inc last week sued Citadel and Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz), accusing them of helping Sentinel insiders make fraudulent transfers on the eve of its bankruptcy. [ID:N05440654]
Representatives of Citadel and Goldman Sachs declined to comment last week to Reuters.
Last month, Reuters reported that Citadel was shuttering a Bermuda reinsurer that it formed in 2004.
In Asia, Citadel was among the many hedge funds to make pre-IPO investments in companies that had hoped to go public but saw their listing plans evaporate when markets crumbled, several investment bankers have told Reuters.
In October, Griffin held an unusual and hastily arranged conference call to quell rumours that Citadel was liquidating some portfolios after its two main funds racked up substantial losses this year.
(Reporting by Tony Munroe, Editing by Lincoln Feast)