Citadel Unit Said to Lose $35 Million on Facebook Trading

Citadel LLC, the investment firm run by Ken Griffin, said it lost money on Facebook Inc. (FB) trades in its broker-dealer unit.

The loss at Citadel Securities may be as much as $35 million, according to a person with knowledge of the firm, who asked not to be named because the information is private.

“Citadel Securities was impacted by issues with Nasdaq and the Facebook initial public offering,” Katie Spring, a spokeswoman for the Chicago-based firm, said today in an e-mail.

Facebook’s share sale last week, the biggest technology initial public offering in history, was blighted by delays and mishandled orders. Nasdaq OMX Group Inc.’s systems were overwhelmed by order updates and cancellations before the social-media company’s shares began changing hands, delaying the start of trading and preventing the exchange from immediately telling investors whether transactions went through.

Shares of Menlo Park, California-based Facebook have slumped 13 percent since its May 17 initial public offering.

Citadel’s market-making business, which buys and sells equities for retail brokers, handles about 7 percent of U.S. listed equity-option volume and 4 percent of U.S. equity volume, according to the firm’s website. Citadel manages $13 billion in assets, including its main Kensington and Wellington hedge funds.

Knight Capital Loss

Knight Capital Group Inc. (KCG), a Jersey City, New Jersey-based brokerage and market maker, said yesterday that it lost as much as $35 million trading Facebook because of the technical problems at Nasdaq.

Separately, Andrew Kolinsky, who ran Citadel Execution Services, the market-making unit, is leaving next month after seven years. He will be replaced by Jamil Nazarali, who joined last year, the person said.

Citadel’s Kensington and Wellington funds have returned 9.3 percent this year through April, said the person. Hedge funds have gained an average 1.7 percent this year, according to data compiled by Bloomberg.

CNBC reported the Citadel unit’s Facebook losses earlier today.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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