SAC expects withdrawals of a least $1 billion, WSJ reports

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Hedge-fund group SAC Capital Advisors has told employees and business partners that it expects investors to withdraw at least $1 billion from the firm amid the US government’s insider-trading investigation, the Wall Street Journal has reported, citing people briefed on the communications.

Outside clients make up about $6 billion of Stamford, Connecticut-based SAC’s $14 billion of assets under management, the newspaper reported. SAC, the hedge fund founded by Steven A Cohen, has been telling senior employees of the expected redemptions and asking clients whether they plan to pull money, the Wall Street Journal said.

Mr Cohen, who built what was once one of the world’s biggest and most successful hedge funds, ventured into the reinsurance industry last year when it set up Bermuda-based SAC Re. The reinsurance firm, headed up by former deputy CEO of Bermuda-based Lancashire Holdings Simon Burton, opened its doors on Par-la-Ville Road last July.

SAC Capital Advisors manages the firm’s assets, while the underwriting team in Bermuda writes reinsurance business.

When asked if investor withdrawals of this size could be detrimental to SAC Re’s operations here, Mr Burton declined to comment. “Unfortunately it’s our policy not to discuss SAC Capital,” the SAC Re CEO said.

A spokesman for SAC said it is premature to speculate about redemptions, the Wall Street Journal reported. SAC spokesman Jonathan Gasthalter declined to comment when contacted by Bloomberg News.

The US Securities and Exchange Commission told SAC last year that it is considering pursuing civil fraud claims related to alleged insider trading in two drugmakers by a former portfolio manager at the firm. Prosecutors say Mr Cohen, 56, discussed the stocks with the manager, the first time government officials have linked him to a transaction at the centre of an insider-trading case.

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