Diamondback hedge fund closing

Diamondback Capital Management, one of several hedge funds to be ensnared in the government’s insider trading investigations, will close down after investors asked to withdraw $520 million in capital, the firm wrote in a letter to investors on Thursday.

The money investors are seeking to pull out of the fund by year end amounts to about 26 percent of its assets, Diamondback wrote in the letter. It would leave the firm with $1.45 billion.

“Rather than continue to manage investor capital while undertaking to restructure the firm to manage this reduced level of assets, we have decided that the most prudent course is to wind down and terminate the funds and return investor capital,’’ said the letter, which was signed by Diamondback founders Richard Schimel and Larry Sapanski.


Diamondback resolved its role in an insider trading investigation in January, paying more than $9 million in fines and penalties as part of deals with the US attorney’s office in Manhattan and the Securities and Exchange Commission.

Diamondback became embroiled in the investigation when two of its former employees, Todd Newman and Jesse Tortora, were charged with participating in an insider trading ring that prosecutors said earned about $62 million in illegal profits trading in technology companies.