A 2006 report from Dresdner Kleinwort Benson raised concerns that
hedge funds could pose systemic risk to the financial markets, using
Citadel's disclosed information as a case study and stating that "at
face value, and without being able to look into the black box, the
balance sheet of today’s Citadel hedge fund looks quite similar to LTCM (http://en.wikipedia.org/wiki/LTCM).

On 27th October 2008, following persistent market rumours, the Wall
Street Journal reported that officials from the Federal Reserve Bnk had
been checking with counterparties of Citadel Investment Group, Sankaty
Advisors, and other large hedge funds to evaluate the impact of any
failure on counterparties.

On 30th October 2008, it was announced that Citadel is winding down
its $1bn Fusion fund of funds. No disclosure on recent performance of
Fusion has been made, but it is expected that most of the remaining
capital will be shifted into its Discovery and Pioneer seeding funds.

On 31st October 2008 Fitch Ratings downgraded the Issuer Default
Ratings and senior debt ratings of Citadel's Kensington Global
Strategies Fund, Citadel Wellington LLC and Citadel Finance LLC,
placing the ratings on Rating Watch Negative pending notification of
redemptions. Despite buybacks of $100million of debt, $400million of
debt remains outstanding.

Fitch stated that they are "concerned that the recent performance of
Kensington and Wellington and future challenges to the broader market
may increase redemption requests in 2008 and into 2009, eroding the
funds' capital cushion".

On 6th Nov 2008, the Wall Street Journal reported that Citadel
Investment Group had been asked by several banks to come up with more
collateral to cover investment losses. It stated that "Citadek's
biggest hedge fund has fallen almost 40 percent this year, causing the
company to hold talks with lenders including Goldman Sachs, Deutsche
Bank and Merrill Lynch".

[Source: http://en.wikipedia.org/wiki/Citadel_Investment_Group]