Nervous Investors Want To Yank $534 Million Out Of Raided Hedge Fund Diamondack

richard schimel

Photo: A Little Hope

FBI-raided hedge fund Diamondback has had requests for $534 million in redemptions, according to Reuters.That figure would amount to about $9.4% of Diamondback‘s capital.

The Connecticut hedge fund, run by SAC alums Richard Schimel and Larry Sapanski, was stormed by the feds last November in connection to the massive insider trading probe that just yesterday ensnared four hedge funders.

Obviously investors are panicky.

They have until February 15 to ask to take out their money, which they’d have back in their pockets by March.

Schimel and Sapanski told investors about the requests in an investor letter sent this month.

They also said that “several large investors have assured the fund of their plans to stay invested in the firm’s two portfolios: Diamondback Partners LP and Diamondback Offshore Fund Ltd,” and added that investors aren’t allowed to countermand their redemption requests once they’re submitted, according to Reuters.

Basically, they’re saying: you can take out your money, but our mammoth clients are staying so you’ll probably be sorry you got out when we start banging out killer returns again.

At the same time, edgy clients were probably made edgier with yesterday’s arrests — while previous charges in the insider trading investigation have primarily been against expert network employees, yesterday four men were implicated who were not only hedge funders, but two of whom worked for SAC.

We’re guessing Schimel and Sapanki’s SAC connection (which goes beyond just former employer — Schimel is married to Steve Cohen’s sister) hasn’t gone unoticed.

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