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

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…