Goldman Sachs Group Inc.’s retirement plan is pulling cash from one of the investment bank’s most famous alumni, liquidating a hedge fund run by Daniel Och’s Och-Ziff Capital Management Group.
Almost all of the multistrategy fund Goldman arranged for employees will liquidate by Sept. 1, according to an investor letter obtained by Bloomberg. The fund dropped 6.9% over the past 12 months, documents provided to investors show. Its assets have declined to about $350 million, a person familiar with the matter said, from $423.6 million in March.
The move is another blow for Och-Ziff, which has been plagued by redemptions and a federal probe. Mr. Och spent a decade at Goldman Sachs, rising to become co-head of U.S. equities trading, and has kept close ties with the bank after starting his own company in 1994. The U.S. has been investigating whether Och-Ziff paid bribes in exchange for an investment from Libya’s sovereign wealth fund and to participate in other deals in Africa. Clients pulled $3.1 billion from Och-Ziff’s funds in the 12 months through June, and an additional $3 billion through Aug. 1, reducing assets to $39.1 billion.
“Och-Ziff is a strong, longstanding partner of the firm, and we continue to invest with them across multiple platforms,” Goldman Sachs said in a statement. The bank remains one of the money manager’s biggest clients, according to another person familiar with the matter, who asked not to be identified discussing confidential dealings.
Joe Snodgrass, a spokesman for Och-Ziff, declined to comment. Shares of Och-Ziff have tumbled 41% this year to $3.70.
The shutdown leaves the bank’s 401(k) investors with just two hedge fund options: vehicles managed by Leon Cooperman’s Omega Advisors and Lee Ainslie’s Maverick Capital.
Omega is also under government scrutiny. In March, Mr. Cooperman — once the head of Goldman’s asset-management unit — told investors that U.S. regulators were considering taking action against him and his firm over trading in certain securities, according to a person familiar with that matter.
Goldman told past and current employees about the decision to discontinue the Och-Ziff fund in the letter on July 29. The move is frustrating some of the 401(k) investors who are concerned their holdings will sink in value as it sells off assets, according to another person with knowledge of the situation.
About 90% to 95% of the portfolio will be liquidated by Sept. 1, according to the memo. The fund, run as a separately managed account, mainly invests in equities. Proceeds will be transferred to a Treasury money market fund.
Earlier this week, Och-Ziff said it more than doubled the money it’s setting aside for a settlement with U.S. authorities. The firm reserved $214.3 million in the second quarter, bringing the total to $414.3 million. Settlement talks are in advanced stages, Chief Financial Officer Joel Frank said Aug. 2.
Goldman Sachs had $6.36 billion in 401(k) plan assets as of Sept. 30, according to Pensions & Investments data.
