Expect a lot more of this kind of news.

Star Tribune: Hedge fund manager Whitebox Advisors won't let customers cash out, according to a national publication that follows the lightly regulated industry that manages money for affluent individuals and institutions.

The Minneapolis firm, which runs about $4 billion in investor assets through several funds and strategies, is drafting a letter to investors that explains recent investment losses and constraints and the terms under which investors may redeem some of their money, according to the Oct. 22 edition of Hedge Fund Alert.

The publication, which circulates among investment managers, said Goldman Sachs put Whitebox in a box earlier this month by requiring that the firm double the amount of collateral it puts up against margin loans used to trade convertible bonds. That puts Whitebox in a temporary squeeze because it must put up more of its own capital and devalued holdings against its margin accounts, which are trading accounts that use borrowed money in part to invest.

...[Whitebox's CEO] delivered double-digit returns for clients in related funds last year. Hedge Fund Alert said two of Whitebox's flagship funds are in negative territory so far this year.