SAC Capital Advisors, the hedge fund owned by billionaire Steven A. Cohen, is bracing for approximately US$3.5 billion in redemption from outside investors as a probe into insider trading of the US$15 billion fund intensifies, the Wall Street Journal has reported.
Outside investors account for roughly US$6.75 billion of SAC Capital’s assets which, includes about US$500 million at SAC Re, a recently established reinsurance firm by hedge fund.
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Notices were put in by the investors during the first quarter, to withdraw US$1.7 billion by the end of 2013.
If the estimates of US$3.5 billion hold, the outflows would represent more than half of the firm’s remaining outside capital, the Wall Street Journal reported.?
Cohen, 56, has roughly US$8 billion of its money invested in SAC Capital. Blackstone Group, Cohen’s largest outside investor has decided to withdraw US$550 million in customer money it has with SAC Capital.
As reported on 28 May, 2013, Blackstone has notified Cohen to pull out client money from SAC Capital.
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By GlobalDataMagnitude Capital, another outside investor, which manages US$3.1 billion, started redeeming funds in the first quarter of 2013 and plans to submit another withdrawal notice for the second quarter.
The long-running insider trading investigation conducted by the U.S. government resulted in nine one-time employees of the firm being charged or implicated in insider trading schemes, the Wall Street Journal reported.
On 20 May 2013, SAC Capital Advisors has told investors that it will no longer cooperate "unconditionally" with the US government’s insider trading investigation.
