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Level Global Investors Shut Down

Level Global Investors Shut Down

Hedge Fund Closes Amid Insider Trading Investigation

Level Global Investors is one of the four hedge funds currently under federal investigation for possible insider trading. This probe proved too much for management as the hedge fund announced that it is shutting down. One of the founders explained the shut down to investors, "The government has commenced what may be a lengthy inquiry with no set timeline. This process, even when it leads to the positive outcome that counsel expects, nonetheless threatens to undermine our ability to meet our fiduciary responsibility to our investors.” Additionally, Diamondback Capital has been asked by investors to cash out $722 million or 12.3% of AUM (Diamondback has also been investigated by federal regulators).
Level Global Investors, currently under investigation along with three other hedge funds for insider trading by federal authorities, told investors on Friday that it would shut down. It cited the investigation and investor withdrawals as the cause. At the same time, Diamondback Capital, which was also raided by investigators, has been asked by investors to return some $722 million by the end of March. This amounts to 12.3% of the company’s capital.
According to Reuters, David Ganek, one of the founders of Level Global, said in a letter to investors, “The government has commenced what may be a lengthy inquiry with no set timeline. This process, even when it leads to the positive outcome that counsel expects, nonetheless threatens to undermine our ability to meet our fiduciary responsibility to our investors.” The letter went on to say, “With the continuing cloud of uncertainty, we understand why investors might elect to redeem in the current environment.”
After emphasizing that the firm is “not a target” of the investigation and has retained outside counsel to review its practices, Ganek added in the letter, “I remain highly confident that my conduct in leading the firm and its investment process was lawful and ethical at all times.”  Source


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