Millennium Hedge Fund Running Out of Friends

The ice is beginning to crack beneath Millennium Partners, the big New York hedge fund run by Wall Street trader and buyout specialist Israel Englander.

Over the past several months, lawyers and other sources say, investors have pulled $800 million out of Millennium, in the wake of a guilty plea last September by Millennium trader Steve Markovitz to making illegal mutual fund trades. The redemptions, which sources say coincide with the departure of several traders and back-office employees, have slashed Millennium's total assets under management to about $3.2 billion.

The drop in assets under management is particularly sharp -- Millennium had $3.3 billion in its offshore fund as of the end of December plus about $1 billion in its fund for domestic investors, according to the Center for International Securities and Derivatives at the University of Massachusetts. ...