SAC Capital Advisors, the $15 billion hedge fund founded by billionaire Steven A. Cohen, is losing the financial support of its biggest outside investor, according to a report by Reuters, which cited a letter it reviewed.
The report said that a pension consultant, operated by Russell Investments, in a May 21 letter to clients wrote that private equity firm Blackstone Group Inc. (BX) has notified Cohen that it intends to “fully redeem” a significant portion of its $550 million dollars the investment firm has invested with the hedge fund.
The decision by Blackstone to withdraw money from SAC Capital — which is worth pointing out has delivered a 25% annual return over its 21-year history — is critical because it comes after senior exes at the Stamford, Conn.- based hedge fund, including Cohen, have reportedly been subpoenaed to testify before a grand jury as part of the government’s investigation of insider trading at Cohen’s firm.
It also comes after the Securities and Exchange Commission in March announced that SAC Capital agreed to pay roughly $600 million in fines to resolve insider trading charges involving CR Intrinsic Investors, a unit of SAC Capital.
The $600 million settlement is the largest settlement in the SEC’s history for insider trading.