Steven A. Cohen's hedge fund SAC Capital Advisors told investors on Friday it would no longer cooperate "unconditionally" with the U.S. government's insider trading investigation.
In a brief letter to investors, the $15 billion hedge fund did not elaborate but said it believes the next few months will be critical in the investigation.
The firm said that "over the coming months there will be more clarity about the outcome of these matters."
The letter, which an investor in the fund who did not want to be identified read to Reuters over the telephone, also said while SAC believes in transparency, it may not be able to give frequent updates to investors.
"In the past we have tried to be as transparent as possible," the fund said. But SAC Capital added that going forward it may "need to keep details confidential."
SAC's letter to investors comes a few weeks before outside investors have to notify Cohen and his fund whether they intend to redeem some of their money before the end of the second quarter on June 30. The hedge fund extended the deadline for submitting redemption requests to June 3 from May 16.
In the first quarter of this year, outside investors submitted notices to redeem up to $1.7 billion.
The investor in the fund said he was not concerned by SAC's announcement. He added that the fund is up 5.96 percent so far this year.
(Read More: The Secret to SAC's Returns May Be Weirdness)
An SAC spokesman declined to comment.
"This is not going in a good direction," said C. Evan Stewart, a partner at Zuckerman Spaeder in New York who has no connection to the case.
"In the middle of one of these situations when you reverse course and instead of embracing transparency you go in the other direction, that's not a good sign for the purposes of resolving your conflict with the government."
The government's investigation into allegations of insider trading at Cohen's fund has been heating up over the past several months.
But the firm also came close to settling a suit against it by the U.S. Securities and Exchange Commission for failing to adequately supervise its employees. SAC and the SEC reached a settlement agreement for a record sum of $616 million, but the judge on the case did not grant unconditional approval to the proposal.
To date, nine current or former SAC employees have been charged with or implicated in insider trading while working at Cohen's fund. In March, the firm agreed to pay the $616 million penalty to settle a lawsuit arising from one of the investigations.
Friday's announcement could reflect new attempts to strategize about the settlement as both SAC and the SEC wait for clarity about its approval. Or it could be a defensive move to keep SAC from being accused of withholding material information, legal experts said.
Cohen also recently told investors that, beginning next year, the hedge fund would claw back compensation from employees who are found to use illegally obtained information in making trades.