SAC CAPITAL Advisors, Steven Cohen’s $15bn (£9.9bn) hedge fund, will today discover if outside investors still have faith in the beleaguered outfit, as the looming deadline to get their cash out of the firm draws to a close.
The company, which has been rocked by a long running regulatory investigation into insider trading, has given its financial backers until later this evening to redeem investments made with the company, the second time it has done so this year.
Heavyweight City investors like HSBC and Morgan Stanley, which hold positions in the funds, will today decide whether they want to pull the cash – raising the stakes for the future credibility of the firm.
Other investors like private equity giant Blackstone, Ironwood Capital and Magnitude Capital are all understood to have already applied for a redemption, due to unspecified issues linked to the probe.
External investors account for $6.75bn of the $15bn in the fund. The rest of the money is Cohen’s and the firm’s employees.
Outside investors collectively pulled around $1.7bn of redemptions in the first quarter of the year. The second redemption deadline – set for later this evening – is likely to see Blackstone pull the rest of the $550m it did not originally redeem in the first quarter, according to reports. Ironwood is also set to pull $100m from the fund.
Cohen, who is worth about $9.3bn, set up SAC in 1992 and built it to house around 40 different portfolios of investments.
A regulatory investigation into the firm, which is based in Connecticut, has been running for about five years.
It accelerated in March when the firm agreed to a $616m agreement with the US Securities and Exchange Commission to settle allegations its employees had engaged in insider trading.
It neither denied nor admitted any wrongdoing following the settlement payment, the biggest in history. Cohen has not been accused of any wrongdoing.