Chicago Hedge Fund Reeling

11/07/2008 05:12 am ET | Updated May 25, 2011

Kenneth C. Griffin was one of those Wall Street whiz kids. As a teenager, he traded out of his dorm room at Harvard. In his 20s, he opened his own hedge fund. In his 30s, he boasted that his company might one day rival Goldman Sachs.

But it can be tough for a boy wonder to grow up -- particularly in the midst of the gravest financial crisis since the Depression. A week before his 40th birthday, Mr. Griffin finds himself in an unaccustomed position: on the defensive.

The Citadel Group of Chicago, the giant hedge fund that Mr. Griffin has run so successfully for nearly 20 years, is leaking money. As of Sept. 30, its two main investment funds were down 20 percent this year, according to Citadel investors. Most of the losses came in the last few weeks, when the markets swooned. Two other smaller Citadel funds are still well in the black.

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