Hedge fund investor returning client funds

NEW YORK, Aug. 21 (UPI) -- New York investor Paolo Pellegrini says he is returning money to clients of his hedge fund for losses it sustained this year.

Pellegrini, a key player in one of the firms that made billions betting against risky mortgages in the recent banking meltdown, said his company would only invest its own funds in the future, The Wall Street Journal said.

Pellegrini's PSQR Capital has lost about 11% so far in 2010, making it hard to raise money for investors, the report said.

"While my views on global economies haven't changed, I've concluded that substantial additional work is required to position the fund to profit consistently from those views," Pellegrini wrote in a letter to investors.

Pellegrini was the investor that helped hedge fund manager John Paulson make more than $15 billion in profits betting against risky mortgages, the report said.

Pellegrini quit Paulson & Co. in 2008 and he started his own firm. However, the Securities and Exchange Commission questioned him regarding his work at Paulson.