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Investor: I'm Pulling Out of SAC as Insider Probe Widens

Javier E. David | Special to CNBC.com

Amid an insider trading investigation involving a former SAC Capital employee, one fund manager has decided to yank his investment from the firm, while a second investor called the scrutiny a "witch hunt."

Scott Eells | Bloomberg | Getty Images

Federal prosecutors on Tuesday charged Matthew Martoma, a hedge fund manager who worked at CR Intrinsic Investors, a unit of SAC, with insider trading. Officials called the trades, which allegedly led to $276 million in gains, the "most lucrative" insider trading scheme ever.

SAC Capital's founder, Steven A. Cohen, has not been charged in the case, and his firm is cooperating with authorities. Still, according to the court filing, Martoma did speak to a party identified as the "Hedge Fund Owner" — a person widely understood to be Cohen — about the trades at the center of the case.

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n Wednesday, a hedge fund of funds manager told CNBC that because of concerns among some of his own investors, he planned to pull his company's entire investment from SAC — a dramatic move that normally takes place only in cases of extreme market turbulence or reputational damage to a firm.

Who is Steve Cohen?

The fund of funds manager, who asked not to be named publicly, said on CNBC that he was making the move reluctantly, even saying that he was "sick" over the decision because SAC had generated such positive returns in recent years. He also said the size of his investment at SAC was in the tens of millions — a "rounding error" given the size of SAC's $14 billion investment chest.

Still, it raised the question of whether the firm faced a wave of redemptions that could begin to take a toll on the firm, which charges some of the highest fees in the $2 trillion hedge fund industry, and has offered investors high returns this year in a turbulent market.

Anthony Scaramucci of SkyBridge Capital — an SAC investor staunchly defended the firm's internal processes to CNBC's "Halftime Report." He branded the media scrutiny as a "witch hunt" that appears overblown.

(Read More: SAC Capital Grows Fund as Legal Battles Mount.)

Although "rogues" in the hedge fund industry are committing "nefarious" acts, Scaramucci said, "SAC Capital has the tightest insider trading protocol in the industry. … There are people in our industry who are rogues, but I don't think Steve Cohen is one of them."

_ CNBC's Kate Kelly provided reporting for this story.

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