Barclays Plc reportedly will spin off its capital arbitrage team, led by Philip Rosenstrach, as a hedge fund on 1/1/12, with the London-based bank and other investors providing about $150 million in funding. The fund will be called Pomelo Capital and be based in New York. Rosenstrach, 40, and 5 team members will run the relative value credit and equity strategy, trading fixed-income derivatives and try to profit from price inefficiencies.  The  fund seeks to raise an additional $500 million by the end of 2012. The bank move is prompted by the Volcker rule, a provision of last year’s Dodd-Frank Act that would ban deposit-taking banks from engaging in proprietary trading.  Barclays is Britain’s second-largest bank, with £390 billion ($605.5 billion) in risk-weighted assets. Rosenstrach, a Barclays director, was formerly a portfolio manager at Talek Investments LLC, a Greenwich, CT-based hedge fund.  He has run the capital structure arbitrage portfolio at Barclays in New York for 5 years, posting positive returns every year, including a 20% gain in 2008.  The portfolio is up 7% so far in 2011. A Barclays spokesperson declined to comment on the spin off.   [Bloomberg, 11/23/11]