Steve Cohen’s SAC Capital Advisors may lose the financial support of its largest outside investor.
Reuters reported that Blackstone has notified SAC that it is considering redeeming a significant portion of its approximate $550 million investment in the midst of the hedge fund’s insider trading scandal.
Blackstone seemed to have a change of heart as eVestment reported in December that the private equity and hedge fund firm was not in a rush to redeem its investment from SAC. SAC is giving investors the opportunity to redeem 50% of their investments in the third quarter and the rest in the fourth quarter.
At least seven current and former SAC employees have been charged or implicated in an ongoing insider trading probe by the U.S. government. SAC recently shelled out approximately $602 million to settle insider trading charges involving former portfolio manager Mathew Martoma, who allegedly made over $250 million for the firm using insider information he received regarding an Alzheimer disease drug trial.
Cohen is reportedly considering proposing a deal, known as a deferred prosecution agreement, to federal prosecutors that would close his firm to outside investors. Under the agreement, SAC would admit wrongdoing but would not be prosecuted unless it breaks the law again
Neither SAC nor Cohen has been charged with any wrongdoing.
Based in Stamford, Conn., SAC manages about $15 billion in assets.