Citigroup Inc. (NYSE: C) chief executive Vikram Pandit announced plans today to shut down Old Lane Partners. This was a hedge fund group that he co-founded and sold to the bank last year for more than $800 million. A regulatory filing showed that the bank took a first-quarter charge of $202 million to write-down the value of its investment in Old Lane, which contributed to its $509 million hedge fund unit loss during the quarter.

Ousted chief executive, Charles Prince, called the transaction "an investment as much as it is an acquisition" last April when the deal was completed. Many saw the deal as a way to recruit Pandit as well as John Havens, who was promoted in March to head of investment banking, trading and hedge funds. It turns out that the deal wasn't a great investment or acquisition as Citigroup took a dive as a result of hedge fund losses.

At least shareholders can be sure they weren't scammed. Pandit may have received $165.2 million last year for his stake in Old Lane, but he reinvested $100.3 million, after tax, into the fund, according to a regulatory filing. This means that he is on the hook for just as much of the losses as many of the other investors. It appears that this was simply a case of poor timing for Citigroup and poor asset investment choices by Old Lane.

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