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https://online.wsj.com/article/SB10001424127887324595904578123393087382984.html
Libra Advisors to Return Investors' Money
- Updated November 16, 2012, 6:33 p.m. ET
Libra Advisors LLC moved this month to return outside investors' money in the $2 billion hedge-fund firm, marking the latest retreat from an industry battered by choppy markets, disappointing returns and a slew of new rules.
In the Nov. 9 letter to investors, Libra founder Ranjan Tandon said "unconventional monetary policies" had inflated asset prices and "under these conditions, I do not want to put your money at risk in any way." New regulations and expected tax increases also factored in the decision to return clients' money, Mr. Tandon wrote.
Libra has also struggled recently. While the New York-based firm has boasted an average annual return, net of fees, of 26% since its 1990 inception, it posted losses in 2011. According to people familiar with the firm, Libra's onshore fund is down 15% through October of this year.
The people said Libra will return investors' money by Dec. 31 and then become a family office, a private entity that manages a wealthy family's investments and personal affairs.
Libra joins a growing list of prominent hedge-fund firms and financial advisers that have bowed out of the business of managing other investors' money amid uncertain markets and heightened regulatory scrutiny.
Industry titans George Soros, Carl Icahn and Stanley Druckenmiller have each returned client funds. And last week, John W. Henry & Co., the trading firm controlled by the Boston Red Sox's principal owner, said it would stop managing outside money amid dwindling assets.
While funds close regularly for reasons including poor performance and the loss of key individuals, investors say the shuttering to outside money of firms such as Libra is distinct.
"These are enormously rich people that have made themselves a tremendous amount of money and they do not want the aggravation and burden of registration," said Amanda Haynes-Dale, a managing director at Pan Reliance Capital Advisors, which invests in Libra.
Complying with a raft of new rules stemming from the Dodd-Frank financial legislation, Mr. Tandon wrote, "will take time away from what I enjoy most, investing."
Mr. Tandon, an Indian immigrant, graduated from Harvard Business School and headed to Wall Street, where he worked for Merrill Lynch & Co.
Ms. Haynes-Dale described Mr. Tandon as a soft-spoken and gifted money manager whose long-term track record is among the hedge-fund industry's best.
Mr. Tandon's wife, Chandrika Tandon, is a former McKinsey & Co. partner who founded advisory firm Tandon Capital Associates. Her self-produced album was nominated for a Grammy award. Ms. Tandon's sister is PepsiCo's PEP+0.11% chief executive Indra Nooyi.
"After due reflection, I have decided to retire from managing client funds and will redeem all external capital," Mr. Tandon wrote in the letter. "I regret any losses that you have incurred, especially losses borne by investors that began investing with Libra more recently."
Libra, which trades stocks, currencies and commodities, plans to waive its management fee for investors who have lost money as of Dec. 31.
By converting their firms to family offices, money managers can avoid many of the new rules imposed by Dodd-Frank, including one that forces firms of a certain size to register with the Securities and Exchange Commission.
The person familiar with Libra said the firm would retain its 14 employees.