Stamford hedge fund SAC Capital Advisors has reportedly informed its employees that it could be facing substantial client withdrawals this year in the face of increasing scrutiny from federal regulators.
Clients who have money invested in SAC Capital’s various funds have until Feb. 15 to submit a redemption request to receive money by the end of the first quarter, according to The Wall Street Journal. The newspaper reported SAC Capital has prepped employees for client withdrawals of $1 billion over the course of the year.
An SAC Capital spokesman is quoted by The Wall Street Journal as saying it is too early to speculate about client redemption requests. SAC Capital manages multiple funds, with assets totaling about $14 billion.
Last week, a former SAC Capital Advisors analyst was sentenced in Manhattan federal court to two years of probation after being convicted on four counts of conspiracy and securities fraud for his participation in insider trading schemes.
Wesley Wang, who worked as a consultant for New York City-based Trellus Management Co. L.L.C. after leaving SAC Capital in 2005, was granted a lenient sentence as a result of “extraordinary” cooperation with federal prosecutors.
U.S. District Court Judge Jed S. Rakoff said at the Jan. 9 sentencing hearing, “I take it that Mr. Wang’s cooperation has been extraordinary … Not just substantial, but going beyond substantial,” according to reports.
Wang is said to have provided regulators with the names of about 20 individuals who engaged in fraudulent activities.