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Diamondback Capital to wind down funds and close

Hedge fund Diamondback Capital Management LLC told investors Thursday that it plans to close and wind down its funds after receiving redemptions requests totaling more than a quarter of its assets.

In a letter to investors Thursday, the Stamford, Conn., hedge fund’s founders Richard Schimel and Larry Sapanski said they received redemption requests for Dec. 31 of about $520 million, or 26% of its assets under management. As a result, the fund would be left with about $1.45 billion in assets under management.

The announcement of the wind down comes as former Diamondback portfolio manager Todd Newman is on trial for alleged insider trading in technology stocks. Mr. Newman has denied wrongdoing.

Diamondback itself avoided criminal charges in a broad crackdown on insider trading by federal prosecutors and entered into a non-prosecution agreement with the government. The firm agreed to pay $9 million in disgorgement and penalties.