Investors Pull $1 Billion From DiamondBack As 5PM Deadline Approaches

richard schimel

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Investors have now requested to pull a total of $1 billion from Diamondback, a $5.5 billion hedge fund that’s become ensnared in the latest insider trading scandal.Update: Now they’re up to $1.3 billion.

According to Dealbook, 29% of the hedge fund’s assets under management are protected by a gate that will prevent the money from flowing out for the next two years. So investors can’t pull enough to cause the firm to liquidate, exactly.

But it doesn’t appear that they would have wanted to, even if they could.

As of February 14th, according to Dealbook, redemptions had only hit $1 billion. 

The rest of the money the firm holds under management was only available for redemption until 5 PM today, when the firm set its deadline for investors to request to redeem their investments.

So Diamondback probably won’t face the same fate as a number of the other funds that have been implicated so far in the scandal, for example:

  • Redemptions at Level Global, another raided fund, are up to $750 million. The firm is liquidating.
  • Both Barai Capital and STG Capital closed because of the scandal.
  • FrontPoint investors pulled $3 billion from the fund after news that its healthcare manager, Chip Skowron, was being investigated.