BoA's Wealth Arm To Question Paulson On Embattled US Hedge Fund Business

Tom Burroughes

28 August 2012

Bank of America’s wealth management arm is to hold a conference call today with John Paulson, who heads the eponymous Paulson & Co hedge fund business, allowing some of the US bank’s advisors and clients to question the embattled business in the wake of sharp losses, media reports said.

Last week, it was reported that Citi Private Bank had withdrawn $410 million from Paulson’s funds, following losses. Citi declined to comment on the matter when contacted by this publication.

The losses have put a harsh spotlight on a hedge fund business that at one stage had enjoyed glowing publicity on account of how Paulson had accurately bet on the collapse of the US sub-prime mortgage market. However, subsequent market plays have not worked out.

A Reuters report, quoting unnamed sources, said the conference call had not been arranged because of the Citi decision, and had been previously scheduled. The sources said that BoA had no plans to change the status of its investments in Paulson’s funds at the present time. The report said the call had been first reported by the Wall Street Journal.

The conference call has been arranged for Merrill Lynch advisors, US Trust advisors and some clients, and such calls are regularly held so that advisors can hear directly from the hedge funds, the sources said.