Ken Griffin's Citadel loses 8% YTD

(Bloomberg) -- Ken Griffin's Citadel posted declines of 8 percent in its main hedge funds this year through March 11, as the $25 billion firm lost money in a unit that has helped drive profits in recent years, according to people familiar with the firm's performance.

The Surveyor arm, which trades equities across 29 teams, accounted for about three-quarters of Citadel's losses during the first two months of the year, said one of the people.

Citadel's early 2016 woes echo those at some other prominent multimanager funds, which typically farm out cash to dozens of individual teams, stay market neutral and are quick to cut losses. Senfina, the multimanager fund run by Blackstone Group LP, slid 17 percent last month, erasing much of its 2015 gain, Hedge Fund Alert reported last week. Izzy Englander's $34 billion Millennium Management fell 2.7 percent in February, its third-worst month ever, according to people briefed on the matter.

Years of growth and top returns have built these firms into some of the biggest in the industry. Since the financial crisis, Citadel's assets have more than doubled as the firm posted gains of more than 10 percent each year. Millennium pulled in $3.8 billion in 2015, or almost one-tenth of the net inflows coming into all hedge funds.

'Challenging Liquidity'

Investors say multimanager firms, some of which held similar positions, were hit hard at the start of the year because their tight risk controls forced them to sell at the same time, further driving down prices.

Surveyor head Jon Venetos left Citadel in January after 10 years. His replacement, Todd Barker, who has been at the firm for 12 years, cut about 15 investment professionals from the unit the following month. Surveyor, formed in 2009, has about 200 employees.

Arrest Ordered for Relative of Blackstone’s Blitzer

(Bloomberg) -- Stuart Ross, accused of trying to extort money from his son-in-law, Blackstone Group LP Senior Managing Director David Blitzer, missed a court appearance in the case, and a warrant was issued for his arrest.

A state judge in Manhattan, Bonnie Wittner, ordered the warrant today for Ross, 73, who was indicted for grand larceny and attempted grand larceny in 2008 with his lawyer, Stuart Jackson, 81. Both pleaded not guilty, and a trial is set for June 7.

Ross, of Aventura, Florida, is the father of Allison Blitzer, David Blitzer’s wife. He and Jackson threatened to ruin David Blitzer’s life unless he paid them as much as $11 million, according to Manhattan prosecutors.

Ross was in a Florida hospital and the warrant shouldn’t have been issued, according to his lawyer Matthew D. Myers.

“Mr. Ross is hospitalized,” Myers said in an interview after Wittner ordered the bench warrant. “He has some serious heart issues and other medical issues that have to be addressed.”

Jackson, who was in court today, and his lawyer, Nicholas G. Kaizer, declined to comment.

Ross demanded that his son-in-law give him large sums of money or he would harass him over the telephone and make accusations against him to his supervisors at Blackstone, law enforcement and the media, according to evidence presented to a grand jury, Wittner wrote in a pretrial decision last April.

‘Threats Escalated’

“These threats escalated to a point where Ross, through his attorney, defendant Jackson, told Blitzer’s attorney, Roger Stavis, that for $5.5 million, Ross would not try to visit his daughter or grandchildren and would stop harassing Blitzer and contacting his business,” the judge wrote.

Jackson mentioned “settlement numbers” of $5.5 million to $11 million to Stavis, according to court papers filed by Jackson’s attorneys, Levitt & Kaizer. Stavis declined to comment.

An agreement was ultimately obtained for Blitzer to pay $250,000 to $400,000 to Ross to cease the contact, Wittner said. At an Aug. 21, 2008, meeting in New York, Blitzer paid Jackson and Ross $50,000 as a down payment.

The meeting was a recorded “sting,” according to Jackson’s court papers.

Ross claims his interactions were a valid business transaction, the judge said. Jackson claims he was acting as legal counsel for an agreement for Ross to give up visitation rights to his grandchildren.

7-Year Separation

Ross told prosecutors in a 2008 interview that he had not seen his daughter Allison since her wedding in 2001.

Christine Anderson, a spokeswoman for Blackstone, declined to comment.

New York-based Blackstone, founded by Chairman Stephen A. Schwarzman, is a global investment and advisory firm with 15 offices worldwide, according to its Web site.

Blitzer, based in London, is a senior managing director in the private-equity group, the Web site says.

The cases are People v. Ross, 08-062712, and People v. Jackson, 08-062713, New York State Supreme Court, New York County (Manhattan).