Friday, 25 July 2014
Last updated 9 min ago
Feb 15 2013 | 3:07am ET
SAC Capital Advisors moved this week to stave off huge redemptions, giving investors more time to decide whether or not to stick with the firm.
As rumors of criminal insider-trading charges emerged against a second SAC portfolio manager, the firm voluntarily changed its redemption policy. While normally investors can only withdraw 25% of their money per quarter, the $14 billion hedge fund has offered clients the chance to pull one-third of their money in each of the remaining quarters of 2013.
The move will allow more time for investors to see how the cases around and against SAC develop for another three months before they make their decisions, at the next redemption deadline in mid-May. The hedge fund had expected about $1 billion in redemption requests yesterday; it manages $6 billion in outside capital. SAC did not say how much investors sought to withdraw yesterday.
Investigators have been turning up the heat on SAC for months, since the arrest in November of former portfolio manager Mathew Martoma. Martoma has pleaded not guilty and has not cooperated with prosecutors, who are thought to be gunning for SAC founder Steven Cohen.
This week, reports indicated that prosecutors are preparing a grand-jury presentation against SAC portfolio manager Michael Steinberg in an unrelated insider-trading case. But reports also suggest that prosecutors are having difficulty building a case against Cohen, and SAC has said it is confident that neither he nor it will face criminal charges.
The new redemption policy, offered to investors Wednesday night, convinced at least one large investor to stick with SAC for now. The Blackstone Group, which for months had been mulling the fate of its $550 million with SAC, said it would keep most of its money with the hedge fund. The firm said it would redeem about $130 million this quarter.
"While we submitted redemptions for certain accounts as appropriate, BAAM successfully preserved flexibility for our clients by extending our decision timeline," Blackstone spokesman Peter Rose said. "We will use this period of time to evaluate all additional information which becomes available."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…