When the market goes against your stock, you hedge it with a short sale. When public opinion goes against your business, do as Citadel Investment Group has and hedge with a heavy-hitting global compliance director.
The $9.5 billion hedge fund said on Thursday that it had hired
Securities and Exchange Commission
regional director Mary Keefe to fill its newly created post of head of global compliance. Keefe, 53,begins her new job in January. She also will serve as associate generalcounsel, reporting to Adam Cooper, the fund's general counsel.
The Chicago hedge fund, the fourth-largest in the world, is bringing21-year SEC veteran Keefe on board at a time when the industry facesincreased federal regulation and general scrutiny.
The Clinton Group, one of its largest competitors, is under investigation by the SEC and Commodity Futures Trading Commission for possible problems with mispriced asset-backed securities.
Other hedge funds have received federal subpoenas from the SEC andstate subpoenas from New York and Massachusetts in connection with theongoing mutual fund market-timing and late-trading scandal.
Citadel, run by founder Ken Griffin, enjoys an excellent reputation inthe industry, and is thought not to trade in the hard-to-price, asset-backedsecurities that have caused problems for the Clinton Group.
"They've grown very nicely in the last couple years, and they're verywell thought of," said George Van, president of Van Hedge Advisors, aNashville, Tenn., hedge fund advisory firm. "I guess they may have made this move regardless. The climate is pretty rough out there. I think the smart
hedge funds are looking at everything they're doing to make sure they aren't vulnerable."
Citadel declined to comment directly on Keefe's hiring. In anews release, Cooper, Citadel general counsel, said the firm has "anintense and continuous commitment" to compliance with federal securitiesrules and laws.
Citadel had about $5 billion under management in mid-2001, and began anaggressive expansion into energy trading options, hiring veterans of AquilaInc., a Kansas City energy distributor that closed in 2002.
The SEC said Keefe, 53, will leave her position next month. She began her job as regional director responsible for a nine-state area of the Midwest in July 1994.
In a news release, the agency cited her work on cases involving
for failing to file required reports as it allegedly tried tohide an auditor's going-concern letter; and a case against the Chicago Stock Exchange for failing to enforce trading rules.
The regional office also brought enforcement actions against Piper Capital Management and PaineWebber, and a prime bank offering fraud case involving John Lauer, risk manager for the Chicago Housing Authority's pension plan.