Raided Diamondback Sees $500M In Redemptions

Feb 9 2011 | 11:51am ET

A Federal Bureau of Investigation raid could cost Diamondback Capital Partners almost 10% of its assets under management.

The firm, which has assured investors that investigators have told it that it is not a subject of a massive insider-trading probe, said that clients have filed redemption requests for $534 million for the end of the first quarter. That amounts to 9.38% of the firm's roughly $5.7 billion in assets.

Diamondback founders Richard Schimel and Larry Sapanski offered further assurance in the letter to investors, telling them that several of its biggest investors plan to keep their money put.

"Several large investors, including the investor group with the largest amount of unlocked capital, have expressed their current intention to remain invested at or close to their current levels," they wrote.

Investors have until Monday to submit their redemption notices. But unlike most hedge funds, Diamondback said such a decision will be final: It will not allow investors to "revoke redemptions after submission."

Diamondback was one of four hedge funds raided as part of the insider-trading investigation in November. The founder of one, Barai Capital Management, and a former technology analyst at Barai Capital have been charged in the case; the other three say they are not focuses of the probe.

In Depth

The Importance of Stability in the Evolving Hedge Fund Administration Market

Oct 5 2015 | 8:17pm ET

Hedge fund administration has evolved from simple record keeping to an integral,...


Citadel's Griffin Reaches Settlement in Contentious Divorce

Oct 8 2015 | 10:14pm ET

Billionaire hedge fund manager Ken Griffin and his wife have settled a long-running...

Guest Contributor

Hedge Fund Marketing To Independent RIA Firms

Sep 30 2015 | 1:56pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth Inc. explains...


Editor's Note