SAC Clients Said to Get More Time to Decide on Redemption

SAC Capital Advisors LP, seeking to keep investors from fleeing as it’s investigated for alleged insider trading, gave them more time to decide whether to pull their money from the hedge fund, according to two people with knowledge of the matter.

Clients faced a deadline of today to tell Steven A. Cohen’s $14 billion hedge fund that they wanted to start the process of getting all their money back by the end of the year. Under existing rules, they could withdraw 25 percent of their assets from the Stamford, Connecticut-based firm each quarter.

Now, SAC is telling investors they can wait until mid-May to make the decision. At that time, they can redeem a third of their money each in the second, third and fourth quarters, said the people, asking not to be identified because the fund is private.

The hedge fund is seeking to limit redemptions after being told by the U.S. Securities and Exchange Commission in November that the agency is considering pursuing civil fraud claims against it, related to alleged insider trading in two drugmakers by former SAC portfolio manager Mathew Martoma. Blackstone Group LP’s hedge-fund unit, citing more flexible liquidity rules, said today it would keep most of its about $550 million in SAC for another quarter while it awaits more information on the case.

The allegations against Martoma marked the first time prosecutors linked Cohen, the fund’s billionaire founder, to trades at the center of an insider case.

Redemptions Estimate

Jonathan Gasthalter, a spokesman for SAC, declined to comment on the additional liquidity option. Gasthalter has previously said that Cohen is confident he has acted appropriately and that SAC continues to cooperate with the government’s inquiry.

SAC has told some employees and outside advisers that it expects investors to withdraw at least $1 billion, or 17 percent of the money it manages for outside clients, a person familiar with the matter said last month. Clients account for about 40 percent of SAC’s assets under management and the rest is from Cohen and his employees.

Citigroup Inc.’s private bank said last month it’s pulling client assets out of SAC. The New York-based bank had about $187 million with the hedge fund, a person with knowledge of the investment said at the time.

HSBC Holdings Plc’s private bank advised clients in December not to add money to SAC, another person said last month. Societe Generale SA’s Lyxor Asset Management unit has asked to withdraw its clients’ funds from SAC, according to a third person. All three people asked not to be named because the information is private.

To contact the reporters on this story: Saijel Kishan in New York at skishan@bloomberg.net; Kelly Bit in New York at kbit@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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