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Citigroup Dumps Hedge Funds To Comply With Volcker Regulations

citigroupNew York (HedgeCo.Net) – In order to comply with coming regulatory changes, Citigroup sold more than $6 billion in private equity and hedge fund assets in the past month, the Wall Street Journal and Reuters report.

“Citigroup last week sold a $4.3 billion private equity fund known as Citi Venture Capital International for an undisclosed price to Rohatyn Group, a private equity fund run by Nick Rohatyn.” Reuters says. “On August 9, Citi sold a $1.9 billion emerging markets hedge fund to the fund’s managers.”

Although not currently in effect, the Volcker Rule is a specific section of the Dodd–Frank Wall Street Reform and Consumer Protection Act originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker to restrict banks from making certain kinds of speculative investments that do not benefit their customers.

Volcker argued that such speculative activity played a key role in the financial crisis of 2007–2010. The rule is often referred to as a ban on proprietary trading by commercial banks, whereby deposits are used to trade on the bank’s own accounts, although a number of exceptions to this ban were included in the Dodd-Frank law.

Alex Akesson
For HedgeCo.net
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