New York State Common Retirement Fund's investment officials are in close contact with executives of Diamondback Capital Management and Level Global Management, two hedge funds that are being investigated by federal officials over possible insider trading violations.
Diamondback Capital and Level Global Management, manage $250 million and $100 million, respectively, for the New York fund in separate account versions of their long/short equity hedge fund strategies.
Staff members of the Albany-based pension fund are “very concerned about reports of the investigation of Diamondback Capital and Level Global Management. We're staying in touch with both companies and are monitoring them carefully,” said Dennis Tompkins, spokesman for State Comptroller Thomas P. DiNapoli, the sole trustee of the $124.8 billion fund.
“We're not going to be making any sudden moves, but we are in conversation with both companies because we do have constraints on the liquidity of our investments with them as per our contract agreement,” Mr. Tompkins said in an interview.
The New York fund's assets are subject to a two-year lockup in the Diamondback hedge fund strategy and a one-year lockup in the Level Global strategy.
A wide swath of institutional investors might have small exposures to Diamondback Capital and Level Global Investors through some of the largest, most institutional hedge funds-of-funds managers.
Consultants said a large number of institutional investors have relatively small exposure to one or both firms through hedge funds-of-funds managers including K2 Advisors, Rock Creek Group, Arden Asset Management, Grosvenor Capital Management and Blackstone Alternative Asset Management.
Afsaneh Mashayekhi Beschloss, president and CEO of Rock Creek Group, and Heather Lucania, a Blackstone spokeswoman, declined to comment. Michael Sacks, CEO of Grosvenor Capital, did not return a call seeking comment.
David C. Saunders, K2's managing partner, said in an interview that K2's investment team is ”aggressively monitoring developments” at both firms. Mr. Saunders declined to say how much K2 Advisors has invested with Diamondback and Level Global.
Arden Asset Management also is “actively monitoring the situation,” said Jonathan Gasthalter, a spokesman. He added, “Arden has a very small allocation to both firms,” but declined to be more specific about the size of the investments.
Bloomberg contributed to this story.