Boston Hedge Fund Burned By Galleon-Linked Redemptions

Jan 25 2010 | 8:10am ET

One of Boston’s biggest hedge funds has been inundated with redemption requests after a close friend of its founders pleaded guilty in the Galleon Group insider-trading scandal.

Loch Capital Management, which one managed more than $2 billion, has been hit with withdrawal requests topping $200 million, Reuters reports. At least some of those redemptions are linked to the longtime friendship of founders Timothy and Todd McSweeney and Steven Fortuna. Fortuna, the co-founder of fellow Boston hedge fund S2 Capital Management, is a key government witness in the Galleon case.

According to prosecutors, Fortuna admitted sharing insider information with the manager of an unidentified Boston hedge fund. There is no indication that that fund is Loch Capital, but a court filing says that the manager and Fortuna were friends. Loch Capital is a technology fund; the Fortuna tip involved Dell Computer.

Neither of the McSweeneys nor Loch Capital have been accused of any wrongdoing.

Fortuna, by contrast, is said to have shared tips with Danielle Chiesi, a former executive at New Castle Partners. Chiesi, who has been charged alongside Galleon founder Raj Rajaratnam, has pleaded not guilty.


In Depth

Israeli Hedge Fund Harnesses Big Data

Jul 28 2014 | 8:10am ET

Apica Green is a multi-million dollar Israeli hedge fund that is based in Tel Aviv...

Lifestyle

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Guest Contributor

Why Is The Shipping Industry Underwater?

Jul 31 2014 | 7:31am ET

Anyone who’s taken a look at the global shipping industry recently probably knows...