US hedge fund Diamondback Capital Management, fined for insider trading this year, announced Thursday it was shutting down its funds after substantial investor withdrawals.
In a letter to clients, Diamondback said it was hit for $520 million in redemption requests for the end of the year, 26 percent of the assets of its funds and an amount that would force the firm to restructure.
Rather than do that, Diamondback founders Richard Schimel and Larry Sapanski said, “we have decided that the most prudent course is to wind down and terminate the funds and return investor capital.”
Diamondback, which according to reports once had more than $5 billion under management, had been caught up in a sweeping push by US securities regulators against endemic Wall Street insider trading that was launched three years ago.
In January Diamondback agreed to pay a fine of $9 million to the Securities and Exchange Commission after it was accused of insider trading in company stocks including those of computer maker Dell.
The letter did not link the shutdown to the SEC probe, but the founders thanked customers for their “patience and support during the last two difficult years, during which we reached closure of the government’s investigation.”
Hedge fund shuts in wake of insider case
