Enter Ben Bernanke, Exit Derek Kaufman

April 17, 2015 0 Comments

Before, I mentioned that I wasn’t sure how helpful Ben Bernanke would be in his new role at Citadel or whether his influence would change the way things are done there. Perhaps I already received my answer.

Derek Kaufman, the head of global fixed income and a member of the Citadel’s portfolio committee, resigned two weeks ago. He was picked up by Citadel in 2008 left JPMorgan in 2008 after working their for 11 years, according to his LinkedIn profile, anyway. A portion of his portfolio was liquidated after he lost $1 billion last year.

What exactly was he trading? Kaufman supervised a team of 18 managers in the Global Fixed Income Fund, which has $4 billion assets under management. He was also running a portfolio for investors that placed bets on sovereign bonds, currencies and interest rates in the global marketplace. These trades were centered on the direction of those interest rates, a very complex analysis to make.

Needless to say, the market turned against Kaufman, which made it very difficult for him to recoup his losses. His fund was only up 0.74% for the year of 2014.

Two weeks later, Ben Bernanke was picked up by the Hedge Fund has a senior advisor. In a statement from Citadel’s CEO, Ken Griffin, he had this to say about the former Fed Chairman:

Ken Griffin: “We are honored to welcome Dr. Bernanke to Citadel. He has extraordinary knowledge of the global economy and his insights on monetary policy and the capital markets will be extremely valuable to our team and to our investors.”

I certainly hope that his extraordinary knowledge can prevent Citadel from losing another $1 billion dollars. Then again, when you go from completely missing the financial crisis, it all gets easier, doesn’t it?

 3,773 total views,  2 views today