Lew served as managing director and chief operating officer of Citi Global Wealth Management. In 2008 he moved to Citi Alternative Investments, which managed billions of dollars in private-equity and hedge-fund investments, some of which were under pressure as the financial crisis neared. A group of the unit’s municipal bond funds lost most of their value that year, placing the bank at the center of a regulatory probe and a wave of litigation from investors.
Lew said he wasn’t responsible for Citigroup’s investment decisions.
Hatch hasn’t said whether he’ll support Lew’s nomination.
Lew, responding to questions from Baucus, said he lost money on an investment in the Cayman Islands and paid any taxes owed. He said he wasn’t aware of the fund’s location when he invested.
Lew had between $50,001 and $100,000 in the Citigroup fund based in the Caymans, according to a 2009 financial disclosure form. He divested from the fund when he took a government position in 2009, he said.
Investment Loss
“My benefit was really very small in the sense that I took a loss when I sold the investment,” Lew said.
Senator Charles Grassley, an Iowa Republican, noted that President Barack Obama has criticized Cayman investments.
“You invested more money there than the average American makes in a year,” Grassley said. “There’s a certain hypocrisy in what the president says about other taxpayers and your appointment.”
Hedge funds often establish investments in Cayman Islands to limit potential taxes for nonprofit and foreign investors.