Hedge Funds Impose Emergency Measures To Block Withdrawal Requests

[Joanne98]

Battered by a sinking global economy Hedge funds hit by fresh wave of withdrawals.


Hedge funds have been hit by a fresh wave of withdrawals as investors search for cash, prompting more funds to impose emergency measures to block repayments.

London Diversified Fund Management, one of Britain’s best-known fixed- income managers, on Friday suspended both its hedge funds as trading conditions in the derivatives markets created valuation difficulties ahead of redemptions.

LDFM, founded by former JPMorgan bankers David Gorton and Rob Standing, manages close to $3bn (£1.9bn), down from a peak of $8bn after its main fund fell 23 per cent this year and investors pulled out. LDFM is joining a roster of hundreds of hedge funds in restricting withdrawals, with investors and prime brokers estimating as many as a fifth have suspended or limited what investors can get back as they have their worst year on record.

This week CQS, a London convertible bond specialist run by former Credit Suisse banker Michael Hintze, began canvassing investors on whether it should change the terms of its main fund to allow it to restrict withdrawals if markets worsen next year.

Huw van Steenis, analyst at Morgan Stanley, said industry assets could shrink 35-45 per cent from June’s $1,930bn by the first quarter of next year, as heavy redemptions added to the pain of poor performance.

http://globaleconomicanalysis.blogspot.com/2008/12/hedge-funds-impose-emergency-measures.html

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1. That's ironic, considering that investors probably put their money in them to 'keep it safe'

Perhaps trusting unregulated bankers may have been somewhat unwise...