Saturday, 31 January 2015
Last updated 13 hours ago
Aug 12 2013 | 1:35pm ET
SAC Capital Advisors is bracing for the withdrawal of the last of its outside capital as it considers layoffs of some of its nearly 1,000 staffers.
SAC last week struck an agreement with prosecutors to continue operating while it fights criminal insider-trading charges. But its few remaining outside investors aren't waiting for a verdict one way or the other; according to The Wall Street Journal, the clients behind the roughly $1 billion in SAC's assets that have not already been the subject of redemption requests are preparing to pull their capital at the next redemption deadline, a week from Friday.
Investors have already moved to redeem nearly $5 billion from SAC this year.
If SAC loses the remainder of its outside capital, that would leave the firm with about $9 billion in assets belonging to firm founder Steven Cohen and employees. Prosecutors do not plan to prevent SAC from returning that capital; under its deal, the firm is required to maintain only 85% of the assets of its "entity defendants," the firm's money-management units. According to the Journal, that figure—which is not specified in court documents—is less than $6 billion.
The protective order agreed by SAC and the government is designed to allow prosecutors to go after billions if SAC, which has pleaded not guilty, is convicted. The deal, approved by a federal judge on Friday, allows the government to go after all of SAC's assets regardless of the agreement.
SAC is also preparing for life as a smaller firm, with talks of layoffs and of merging some business units. While no plans are final, the Journal reports that the hedge fund considers a downsizing inevitable.
Among the potential plans under discussion is transforming SAC into a family office.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…