Hedge fund Citadel launches investment banking unit

Citadel Group, Chicago’s biggest hedge fund, is entering the investment banking business, hiring three former Merrill Lynch executives to spearhead the effort.

Todd Kaplan, who joined Citadel in March, will run the unit, reporting to Citadel Securities CEO Rohit D’Souza. Reporting to Mr. Kaplan will be Brian Maier, head of industry groups, and Carl Mayer, head of leveraged finance. Citadel announced the appointments in a statement Friday.

Citadel’s push into investment banking marks a fundamental shift for the company, which CEO Kenneth Griffin started out of his Harvard dorm room and built into a $20-billion powerhouse before wrong bets last year sent his two biggest funds down 55%.