SAC Capital Redemptions Less Than $3B [REPORT]

SAC Capital AdvisorsSee page for author [Public domain], via Wikimedia Commons

SAC Capital Advisors, LP investors have pulled out between $2 and $3 billion during the second quarter, reports CNBC.

SAC Capital Redemptions Less Than $3B [REPORT]

According to CNBC’s Kate Kelly, the redemption amount is closer to $3 billion and in line with earlier expectations.

Earlier estimates indicated that the hedge fund’s investors would pull out $3.5 billion during the second quarter.

During the first quarter, the hedge fund saw redemption requests from clients totaling $1.68 billion, representing roughly one-quarter of outside capital.

The hedge fund’s mass redemptions came as part of a standard quarterly window for capital return notices, known as redemptions.

The deadline for withdrawal for the second quarter was set June 3.

SAC Capital Funds

As of May, the hedge fund managed about $14.5 billion of which Steven Cohen has about $7.5 billion in SAC funds while employees hold $1.5 billion of assets. However the large redemptions from outside investors will reduce the capital and the potential profits available to the hedge fund’s employees.

Earlier reports suggested that consequent to redemption from outside investors, the hedge fund might cut staff from the present level of 950. Some of the existing employees at SAC Capital are reported to have approached headhunters for new openings.

Steven Cohen is considered one of the $2 trillion hedge fund industry’s best known and most successful traders. His 20-year old firm generated an average annual return of 25 percent.

The government has been intensifying its insider trading probe at SAC Capital.

In November last year, the commission filed an insider trading lawsuit against SAC Capital’s former portfolio manager Mathew Martoma. He pleaded not guilty to the charges of the SEC, and refused to provide any information that would implicate Cohen in the case.

The hedge fund agreed to pay a penalty of $616 million to settle the insider trading complaint of the Securities and Exchange Commission (SEC) subject to the approval of the court.

Recently, a fifth executive at SAC Capital received a subpoena to testify before a grand jury.

The testimony could relate to the potential charges that the hedge fund faces in connection with trades it made in July 2008 in shares of the drug makers Elan Corporation, plc (NYSE:ELN) and Wyeth Limited (BOM:500095) (NSE:WYETH).

The hedge fund’s founder Steven Cohen was also asked recently to testify before the grand jury as part of the government investigation.

Insider-trading charges have to be made within five years of conduct in question. Due to the five-year deadline imposed to file securities fraud charges, the prosecutors have until mid-July to bring a case against the hedge fund related to those trades.

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About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports

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