Goldman´s retirement plan to pull $350m from Och-Ziff fund

Goldman Sachs Group’s retirement plan was set to liquidate almost all of its holdings in the hedge fund run by its investment bank’s most famous alumni, Daniel Och, according to a report by Bloomberg.

About 90-95% of the $350m fund, run by Daniel Och’s Och-Ziff capital management group, would be liquidated by 1 September 2016 according to a memo obtained by the newswire.

The fund, run as a separately managed account, mainly invests in equities, with its largest holdings in consumer discretionary and industrial stocks. The proceeds from the liquidation will be transferred to a Treasury money market fund.

Och spent a decade at Goldman Sachs and eventually became co-head of US equities trading and has since kept ties with the bank after starting his own company in 1994. He started Och-Ziff with backing from Ziff Brothers Investments and first went public in November 2007. He raised $1.15bn which was then the largest public offering of a US hedge-fund manager. According to the Bloomberg´s Billionaires Index he’s worth $2.8bn.

The Och-Ziff fund had however faced many redemptions as well as a federal probe. The US has been investigating whether Och-Ziff has paid bribes in exchange for an investment from a Libyan sovereign wealth fund and to participate in other deals in Africa. In the 12 months leading up to June, clients pulled $3.1bn from Och-Ziff’s funds and an additional $3bn in the period through to 1 Aug 2016 reducing assets to $39.1bn.

Earlier this week, the capital management group said it had more than doubled the money it’s setting aside for a settlement with the U.S. authorities. It reserved $214.3m in the second quarter, which brought the total up to $414.3m. Chief Financial Officer Joel Frank said settlement talks were in the advanced stages.

Despite this, the bank said: “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.” And likewise the bank remained the asset manager’s biggest clients according to another confidential source.

The fund dropped by an annualized 6.9% over the preceding 12 months according to documents provided to investors. The shutdown would leave the bank’s 401 (k) investors with two remaining hedge fund options, vehicles managed by Leon Cooperman’s Omega Advisors and Lee Ainslie’s Maverick Capital.