Vicis puts launch on hold following redemption run

The options trading manager, where two executives are also currently under investigation by the FBI, had decided to create a second fund after heavy redemptions at the end of last year forced it to impose gates on its flagship product. 

At the time, Vicis Capital offered investors the option of siphoning off a portion of the more illiquid assets into a separately traded vehicle, while the more liquid assets were sold to meet a proportion of the redemption requests.
At the end of 2009, Vicis looked to have made a decision to wind down its flagship fund and start trading a new vehicle based on exactly the same strategy as the old one. However, Vicis has now taken the decision to put the new fund on hold.

Assets under management in the flagship fund had grown to $5bn as late as 2009, thanks largely to a 12% return in 2008, but investors started pulling capital from Vicis Capital after a poor run of results in 2009. By September, Vicis was forced to suspend redemptions when $550m of redemption requests were posted by the 30 September deadline. The fund’s AuM had fallen to around $2.5bn, a drop of almost half its total assets in October 2008.

Last month, two Vicis traders became the subject of a federal investigation. According to reports, the FBI and a grand jury started a probe into Vicis’ executives to examine whether they had any involvement in an alleged insurance fraud scheme involving Medical Solutions Management and MDwerks Inc, two companies Vicis has provided $30m in equity and debt financing to over the past five years.

In an October newsletter from real estate firm Jones Lang LaSalle, Vicis’s office, located on Park Avenue, New York was listed as available for sublease.