Hedge fund manager FrontPoint Partners will lay off 28 non-investment employees after clients asked to redeem 40% of the firm’s assets, according to a statement from the company.
“These reductions will not impact our investment teams and overall client service,” the statement said.
FrontPoint Partners managed $7.5 billion at the beginning of November and received $3 billion of redemption requests from clients, according to a Nov. 26 letter from FrontPoint to clients that was obtained by P&I Daily.
About half of the redemption requests involved FrontPoint’s health-care hedge funds, which were closed and liquidated at the end of November.
FrontPoint’s health-care funds have been impacted by an investigation conducted by Manhattan U.S. Attorney Preet Bharara involving Yves Benhamou, a former adviser to Human Genome. Mr. Benhamou was charged Nov. 2 by prosecutors with insider trading and conspiracy and allegedly passed insider tips to Chip Skowron, the co-portfolio manager of FrontPoint’s health-care funds. FrontPoint placed Mr. Skowron on leave pending the outcome of the probe. Neither FrontPoint nor Mr. Skowron has been charged with wrongdoing.
FrontPoint’s client letter said the firm “will begin 2011 with an AUM of approximately $5 billion invested across 15 different strategies (including capital commitments to direct lending).”
The letter said FrontPoint expects to close a series of direct lending funds this month with total capital commitments of more than $1 billion.
Bloomberg contributed to this story.