Several employees have been charged with securities fraud, and the fund agreed to pay the SEC $614 million to settle those charges.
But some clients became spooked two weeks ago after SAC told investors it had officially stopped cooperating with the government.
Sources say many of SAC Capital's long-time investors, including the Blackstone Group and Morgan Stanley, are taking their money and walking away from one of the best-performing hedge funds of all time.
Most of time, when the prime brokers or institutions pull themselves out from a hedge fund, the fund must liquidate some of its assets for redemption. MS, on behalf of its investors, invested about $180 millions into SAC. And Blackstone had positions about $550 millions. So a total amount of $730 m will be taken out in a short time. This is still not the end, and sometimes it is almost certain this is not an end. A ripple effect of redemption driving up by investors who run fast to get themselves out may rush in within a short-time window. We will watch the progress closely in the following days.
Sunday, June 2, 2013
The money outflows from SAC may trigger sell-offs in some illiquid assets
Both SAC and its founder Steven A. Cohen have been at the epicenter of a federal investigation into insider trading for several years. However, the situation is getting worse recently as the Justice Department's case against the firm and Cohen appears to be ramping up.
Several employees have been charged with securities fraud, and the fund agreed to pay the SEC $614 million to settle those charges.
But some clients became spooked two weeks ago after SAC told investors it had officially stopped cooperating with the government.
Sources say many of SAC Capital's long-time investors, including the Blackstone Group and Morgan Stanley, are taking their money and walking away from one of the best-performing hedge funds of all time.
Most of time, when the prime brokers or institutions pull themselves out from a hedge fund, the fund must liquidate some of its assets for redemption. MS, on behalf of its investors, invested about $180 millions into SAC. And Blackstone had positions about $550 millions. So a total amount of $730 m will be taken out in a short time. This is still not the end, and sometimes it is almost certain this is not an end. A ripple effect of redemption driving up by investors who run fast to get themselves out may rush in within a short-time window. We will watch the progress closely in the following days.
Several employees have been charged with securities fraud, and the fund agreed to pay the SEC $614 million to settle those charges.
But some clients became spooked two weeks ago after SAC told investors it had officially stopped cooperating with the government.
Sources say many of SAC Capital's long-time investors, including the Blackstone Group and Morgan Stanley, are taking their money and walking away from one of the best-performing hedge funds of all time.
Most of time, when the prime brokers or institutions pull themselves out from a hedge fund, the fund must liquidate some of its assets for redemption. MS, on behalf of its investors, invested about $180 millions into SAC. And Blackstone had positions about $550 millions. So a total amount of $730 m will be taken out in a short time. This is still not the end, and sometimes it is almost certain this is not an end. A ripple effect of redemption driving up by investors who run fast to get themselves out may rush in within a short-time window. We will watch the progress closely in the following days.
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