Steven A. Cohen's SAC Capital Advisors will shut down its London office by the end of the year as the hedge fund downsizes in response to a long-running insider trading investigation, according to a memo sent to staff on Tuesday.
In the memo SAC president Tom Conheeney, who told the London staff in person Tuesday, also told employees the hedge fund cut six employees based in the United States this week.
"As our negotiations with the government have unfolded, it has become clear to us that the outcome the government is demanding is likely to have a greater than first anticipated impact on the firm," Conheeney wrote in the memo obtained by Reuters. "We have concluded that we must operate as a simpler firm and reduce our capital allocations."
SAC did not have further comment on the contents of memo.
The pending London closure was first reported by Bloomberg.
This summer, U.S. prosecutors indicted Cohen's firm, saying SAC fostered a culture in which employees flouted the law and were encouraged to tap their personal networks of contacts for inside information about publicly traded companies.
SAC is close to reaching a deal with U.S prosecutors to resolve the insider trading case against it, Reuters reported last week.
The deal could come within days and would likely involve some admission of liability by the firm and a payment of more than $1 billion. It is not yet clear if Cohen will be banned from managing outside money as part of the settlement.
With investors pulling most of the $5 billion in outside money managed by SAC Capital in recent months, Cohen will not need as large an operation and is looking at becoming a family office sometime this year or next. The firm began the year with about 900 employees.
In addition to recent staff cuts and departures, SAC also let go of one dozen marketing and sales people in recent months.
The closings of satellite offices, such as London, are to be expected as the firm converts to one that manages Cohen's own roughly $9 billion fortune and no outside capital, said one headhunter who declined to be named due to ongoing work with hedge funds. Earlier this year SAC shuttered a small office in Chicago.
SAC is also in discussions to sell its reinsurance business, and Cohen himself is looking for buyers for all or part of his more than $30 million equity stake in privately held Kadmon Pharmaceuticals.