New York-based Archeus Capital Management is the latest hedge fund to fall from glory and announce that it is shuttering its doors.

The firm, which once had $3 billion in assets under management and now handles approximately $700 million, plans to wind down at the end of the year, according to a letter sent to investors.

In the letter, Archeus said it was unable to get back on its feet following a series of redemptions, which were sparked by investor worries over record-keeping problems, and that investors’ money would be returned Dec. 31.

According to the letter, "One obstacle we have not been able to overcome has been the negative sentiment which has snowballed as a result of our third-party administrator’s failure to properly maintain the books and records of our funds," stated the letter, which was signed by by  CEO Gary Kilberg and CIO Peter Hirsch. "This failure, and their subsequent inability to properly re-reconcile the funds’ records, led to a series of investor withdrawals from which we have not been able to recover."

Although the letter did not mention the name of the service provider, numerous sources confirmed that it was GlobeOp Financial Services.

A spokeswoman for GlobeOp told FINalternatives, “We totally disagree with the allegations being made, but are in a difficult situation because we respect the confidentiality agreements signed with our clients, therefore, we don’t publicly discuss the details of any of any of our client relationships.” She added, “And while it is easy to point figures at third parties, as several articles have pointed out, investors typically liquidate based on a fund performance results.”   

(Updated Nov. 2, 2006)