Sept. 17 (Bloomberg) -- Richard Schimel, co-founder of Diamondback Capital Management LLC, will start a new hedge-fund firm in the fourth quarter to trade global stocks, according to a letter sent to potential investors.
Schimel, 45, will open Sterling Ridge Capital Management with 11 employees, seven of whom previously worked at Diamondback, which shut last year. Prashant Kolluri, 42, a former managing director at alternative-investment firm Investcorp, will be president and chief operating officer of New York-based Sterling Ridge.
Schimel’s firm will have a single investment portfolio, a change from Diamondback, where 22 teams traded separate portfolios and were paid on their performance. The firm will offer early investors a share class with lower fees.
“I believe a single integrated portfolio, where the compensation of key staff is tied to the overall performance of the funds, encourages better teamwork,” Schimel wrote in the letter.
Steve Bruce, a spokesman for Sterling Ridge at ASC Advisors LLC, declined to comment.
Diamondback, founded by Schimel and Lawrence Sapanski in 2005, closed following client withdrawals after three of its employees were charged with insider trading as part of the government’s multiyear probe. The Stamford, Connecticut-based firm, which at its peak managed $5.8 billion, agreed to pay more than $9 million to resolve a U.S. Securities and Exchange Commission lawsuit over trades made in 2008 by two of the employees.
A third Diamondback employee, portfolio manager Anthony Scolaro, pleaded guilty to conspiracy and securities fraud in November 2010.
The office of Manhattan U.S. Attorney Preet Bharara agreed not to prosecute Diamondback for the actions of the employees and said the co-founders weren’t aware of their misconduct.
--Editors: Larry Edelman, Christian Baumgaertel