Investors Pressure SAC, but Performance Rises

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Citigroup Headquarters in Long Island City, New York.

Citigroup's private bank has put the embattled hedge-fund company SAC Capital Advisors on watch, say people familiar with the matter, making it the latest big investor to either part ways with SAC or say it's considering doing so.

Putting a hedge-fund on watch is a standard step for the Citigroup private bank when a fund is subject to some sort of news event, adds one of the people familiar with the matter.

Nonetheless, it's a signal that, while no final decision has yet been made, SAC Capital may be fired from the bank's hedge-fund platform, removing its clients' ability to invest through Citigroup in the Stamford, Conn. fund. (Read More: Former SAC Fund Manager Has Bail Set at $5 Million)

Citigroup is at least the second major bank fund platform to warn investors in recent days that SAC's future with it is uncertain.

Morgan Stanley recently made a similar move, say other people familiar with the matter, issuing a letter to investors explaining its stance. Meanwhile, at least two money managers have notified SAC that they would like to redeem capital: the asset-management unit of the French bank Societe Generale, and another, smaller fund of funds in the U.S., other people familiar with the matter have said.

Ironically, even as it digests the latest government allegations of a former employee's insider trading, SAC has turned around another positive month, leaving it up nearly 12 percent for the year through November, said someone familiar with the company's performance.

At the same time, the average global hedge fund is only about 2 percent year to date, according to HFR. (Read More: SAC May Face Civil Charges in Insider Trading Probe )

The reviews and redemptions come at a sensitive time for SAC, a subsidiary unit of which was charged in parallel Department of Justice and Securities and Exchange Commission suits on Nov. 20 with securities fraud for alleged trading on illegally-obtained stock tips.

The former trader named in the suit, Mathew Martoma, has claimed innocence, and SAC has said it acted appropriately. But because SAC founder Steve Cohen is personally implicated in the events described in the complaint -- and allegedly partook in a decision to sell stock positions that was based on insider information Martoma had -- the suits appear to be having a far greater impact than others filed in the past.

At least a half-dozen former SAC employees have been ensnared in insider-trading charges to date, and several have pled guilty.

Still, many investors have remained loyal to SAC, and staffers continued to seem focused and confident in the firm's future, say people who work there. One additional boon: more than $8 billion of SAC Capital's $14 billion in assets belongs to Cohen and other insiders.

At least a half-dozen former SAC employees have been ensnared in insider-trading charges to date, and several have pled guilty.

—By CNBC's Kate Kelly; Follow her on Twitter: @KateKellyCNBC