Fed Questioned Citadel Counterparties

So is this what started all those rumours that the Fed and the FSA had raided the offices of Citadel last week? The Wall Street Street Journal reported over the weekend that the Federal Reserve had questioned “Wall Street counterparties in at least two instances about their exposure to debt and other holdings of Citadel Investment Group and Sankaty Advisors LLC.”

We guess having the Fed poking around, asking questions about you, especially when combined with news that your  two main funds had lost 35 per cent since January, is a good way to to get rumours started. But apparently this now the new normal for the Fed.

“The Fed has been speaking with dozens of prominent hedge funds and their counterparties in the past weeks to monitor trading and liquidity issues as the financial crisis deepened, industry sources have said,” Reuters reports.

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