SAC Capital Advisors expects client withdrawals of at least $1 billion in 2013 as the hedge fund battles intense regulatory scrutiny over insider trading allegations, the Wall Street Journal said on Friday, citing people briefed on the matter.
The amount would be nearly a fifth of the $6.3 billion SAC manages for outside investors. The rest of the $14-billion fund is owned by founder Steven A. Cohen and associates including other employees.
The company's executives have been alerting advisors and senior employees recently about the withdrawal requests, better known as "redemptions" in the hedge fund industry. The move could deal a serious blow to company, the Journal said.
Earlier this week money manager Titan Advisors, one of SAC's oldest outside investors, decided to pull its money from the company, said to be between $75 million and $100 million.
The Journal also quoted the people as saying that SAC's top ranks have been contacting investors to gauge whether they want to keep their money with the firm or not.
In November SAC informed investors in a conference call that the U.S.Securities and Exchange Commission had warned it was considering filing charges against the hedge fund over insider trading allegations.
The move by the SEC was made a week after prosecutors and regulators charged one of SAC's former employee, Mathew Martoma, with running one of the most lucrative insider trading schemes ever. The authorities did not charge Cohen with wrongdoing but they contend he signed off on the trades.
Martoma was the seventh former employee of Cohen to be charged or implicated in the insider trading allegations, and the criminal complaint against him is the first to refer to Cohen.