SAC Capital Advisors, the US$15 billion hedge fund founded by billionaire Steven Cohen, is losing the financial support of its biggest outside investor Blackstone Group, according to a report by Reuters.
The report said that a pension consultant, operated by Russell Investments, in a letter to clients on 21 May, wrote that Blackstone has notified Cohen that it intends to ‘fully redeem’ a significant part of the approximate US$550 million it has invested with the hedge fund.
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Blackstone’s investment with SAC Capital is through several investment funds known as hedge fund of funds and also through separately managed accounts it maintains for clients.
The decision to redeem from SAC Capital impacts only client money invested in its hedge fund of funds, according to the letter.
However, it’s not clear how much of the US$550 million is in those hedge fund of funds and it is not clear what Blackstone is advising clients who have money in separately managed accounts that is invested with SAC Capital.
The report comes after senior executives at SAC Capital, including Cohen, reportedly received subpoenas in recent weeks as part of an insider-trading investigation of the firm by federal prosecutors.
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By GlobalDataIt also comes after the Securities and Exchange Commission in March announced that SAC Capital agreed to pay roughly US$600 million in fines to resolve insider trading charges involving CR Intrinsic Investors, a unit of SAC Capital.
Earlier in May, SAC told investors that it will no longer cooperate "unconditionally" with the US government’s insider trading investigation.
