Monday, 27 February 2017
Last updated 19 min ago
Feb 15 2017 | 8:43pm ET
Investors pulled some $13 billion from beleaguered Och-Ziff Capital Management over the past 13 months as the hedge fund manager dealt with the fallout of a five-year bribery investigation and very expensive settlements with the U.S. Justice Department and the SEC.
Redemptions totaled around $8 billion last year and more than half that amount in January 2017 alone, according to a Bloomberg article. The settlements, which were announced in September 2016, totaled more than $400 million and also included a three-year deferred prosecution agreement.
Och-Ziff was accused of violating the U.S. Foreign Corrupt Practices Act by paying bribes to officials in various African countries, including Libya and Congo, through a subsidiary, and authorities charged two former Och-Ziff executives with violations of the FCPA in January of this year. The U.S. Foreign Corrupt Practices Act bars the payment of money or provision of gifts by U.S. companies to foreign officials in exchange for business, directly or otherwise.
Redemptions were reportedly concentrated in Och-Ziff’s multi-strategy funds, and were partially offset by performance gains. Nonetheless, AUM at the firm declined from $43.7 billion a year ago to $33.6 billion as of February 1. Assets were as high as $46 billion in December 2014.
For his part, founder Daniel Och believes the worst is behind the firm now that the settlement has been reached. In statements made on a conference call Wednesday, he noted an improving tone in conversations with investors pleased to have the investigation in the rear view mirror, Bloomberg added. Recent performance trends have reportedly carried over into 2017 and the manager has increased exposure to financial and energy positions, while the expected policies of the new Trump administration are thought to be supportive of the company’s merger arb and long/short equity strategies going forward.
Och-Ziff, the largest publicly traded hedge fund manager in the U.S., was founded in 1994 and brought public at $32 per share in late 2007. The company’s stock closed Wednesday at $3.23.