Citigroup Hedge Funds, Lehman, Merrill Lynch, Goldman Sachs all telling customers their $ is FROZEN

[El Pinko]

http://www.reuters.com/article/fundsFundsNews/idUSN1551782720080215


Struggling Citigroup hedge fund bars withdrawals -WSJ
Fri Feb 15, 2008 1:13am EST

NEW YORK, Feb 15 (Reuters) - Citigroup Inc (C.N: Quote, Profile, Research) has barred investors in its CSO Partners hedge fund from withdrawing their money, according to a Wall Street Journal report on Friday.

Citigroup suspended redemptions in CSO, a fund specialising in corporate debt, after investors tried to withdraw more than 30 percent of the fund's $500 million in assets, said the story.

CSO had an 11 percent loss last year, forcing Citigroup to inject $100 million to stabilise the fund, said the Journal.




http://www.iht.com/articles/2008/02/15/business/15place.php

Investors' funds in auction-rate securities frozen
By Jenny Anderson and Vikas Bajaj
Published: February 15, 2008

Some well-heeled investors got a big jolt from Goldman Sachs this week: Goldman, the most celebrated bank on Wall Street, refused to let them withdraw money from investments that they had considered as safe as cash.

The investments at issue are so-called auction-rate securities, instruments at the center of the latest squeeze in the credit markets.

Goldman, Lehman Brothers, Merrill Lynch and other banks have been telling investors the market for these securities is frozen — and so is their cash.

The banks typically pitch these securities to corporations and wealthy individuals as safe alternatives to cash, investors said. The bonds are, in fact, long-term securities. But the banks hold weekly or monthly auctions to set the interest rates and give holders the option of selling the securities.

[closeupready]

1. Where in the financial system's collapse does this benchmark lie?

??

[originalpckelly]

3. This is a Category Oh Shit storm, on the economic collapse meter.

It's like an old fashioned bank run, everyone is afraid the bank will fail, so they pull out their money, but at a certain point the bank has to stop giving money back, because a bank usually doesn't have it all available in "cash" on hand.

[closeupready]

6. Yep. It will get swept under the rug, but make no mistake.

This is a crisis of confidence very similar to one where your own bank tells you that you can't withdraw your money right now.

These investments were supposed to be like CASH! Very bad times ahead.

[originalpckelly]

8. Yeah, almost like a CD, but more liquid...

It sounds like that was how they advertised it.

[malaise]

14. I think I'm going to retire early

and cut and run with my pension money. It's in Euros but this shit has already reached England. We can't afford to lose both our pensions when the global economy collapses.

[originalpckelly]

18. This is a hedgefund...

but it's scary because of this question:
"What does it mean for all the other hedge funds?"

That's important, because a LOT of money is in these hedge funds, it's like a giant getting drunk, no one knows which one of us little people is gonna get smashed next!

[malaise]

22. I know but right across the globe banks

are in trouble. Time to cut and run.

[originalpckelly]

2. Oh shit.

Talk about some bad news, this is very, very, very bad news.

This echoes of a panic. :scared:

[inanna]

4. Recommended!

Damn, this is getting worse by the minute, isn't it?

[slipslidingaway]

5. K&R n/t

[NNN0LHI]

7. Whoa dude. I ain't quite sure what this exactly means

But I bet it isn't good.

Don

[NJCher]

9. a couple points

A quote from the second article:

"These types of instruments depend on new investors showing up to own the securities."

I think this statement is key. Investors, like everyone else, are holding the cards close to the vest.

As far as the hedge fund goes, those bastards deserve everything they get.




Cher

[Trailrider1951]

27. Quote:

"These types of instruments depend on new investors showing up to own the securities."


Gee, isn't that the classic definition of a ponzi scheme?

:(

[sicksicksick_N_tired]

10. Uh, whoah. Won't this actually INCITE panic?

:shrug:

[Wednesdays]

11. And so the deluge begins

Crowds madly rushing the banks' barred doors!

[BadgerLaw2010]

12. Your title is misleading and probably against federal law.

Saying "Citi customers money frozen" implies the bank.

You really had better specify hedge funds.

[originalpckelly]

13. "Your title is misleading and probably against federal law."

:rofl:

I love DU!

[El Pinko]

15. Done.

Sorry for lack of clarity.

[closeupready]

16. You mean, you think his speech constitutes a felony?

How so?

[Selatius]

24. He's probably operating under the assumption that inciting market panic is illegal.

It's only illegal if the information being spread is false. Usually, the originator of the false information spreads it for personal financial gain, but you have to prove that the originator is both spreading false information AND that he KNOWS the information is false and decided to spread it anyway.

[Rosemary2205]

19. Quit casting asparagus.

Are you series?

[Rosemary2205]

17. Remember when this happened with S&L's?

The biggest depositors all started yanking out money and the Feds had to freeze my puny amount of money so I could not pay my bills. Then they told me I could have $500 a month. It kept there from being a run on the banks and we all managed to survive. I got every single penny of my money plus all due interest. I did not lose anything -- they even asked landlords and utilities not to charge late fees if someone was late only because of difficulties accessing money - and in my corner of America they mostly cooperated.

I'm assuming this is the same thing. Just a measure to slow people down and make them spread out withdrawals. If this means the slow collapse of hedge funds, that gives me a mixed feeling. On one side I am thinking halleluia, on the other, it makes me wonder what the economic predators will fuck up next for the rest of us all.

[originalpckelly]

20. There is no FDIC for hedge funds.

These things don't affect normal people directly, just the richest of the rich. But the problem here is that there are unknown implications for other hedge funds.

I'm surprised the market isn't much lower on this news.

[NJCher]

21. I agree, Rosemary

And I'm glad the OP changed the subject line because it was unnecessarily alarming.

Hedge funds are risky, very risky. Goes with the territory, IMO.



Cher

[tbyg52]

23. Oh dear.

I guess I need to get my bitty bit out of mutual funds. But I've been saying that for a while....

Sigh.... I hate the way you can't know what they're going to redeem for until the end of the day. But I don't want to mess with individual stocks either, nor do I have enough money for that.

Well, I guess I should be grateful just to have money at all (so far).

[Supersedeas]

25. the veil is being lifted

[tuckessee]

26. This is very interesting......

If the trend continues I wonder where it will spread next?