The beleaguered hedge fund unit of the Clinton Group lost three top executives in a reshuffle as investors continued to pull money out of its remaining funds specializing in mortgage- and asset-backed securities. The 13-year-old hedge fund also told investors it is widening its emphasis to include merger arbitrage and distressed investing. It named statistical arbitrage portfolio head Richard Cohen as its new chief investment officer and convertible arbitrage chief Michael Vacca as chief operating officer. Both have worked at Clinton for six years. A letter to investors, dated April 16, the company announced that Rishin Roy, Thomas Schnepp and Seth Fischoff had left the firm. A former investor said he believed it was due to dwindling assets in the firm's once formidable hedge fund business. Clinton had about $5.5 billion in its six hedge funds last August, and now has about $1.4 billion in five funds. Its flagship Trinity Fund closed after it suffered a 21.5% loss in 2003. It still runs about $4.5 billion in relatively illiquid collateralized debt-obligation pools, which prevent investors from withdrawing their money. A person familiar with the firm said the Clinton Multistrategy Fund, which had about $1 billion at the end of 2003, was up 4% for the year to date. Problems with Clinton's hedge funds surfaced last October when senior trader Anthony Barkan resigned in a very public fashion, issuing a statement that he was concerned about the valuation methods used in pricing some of the bonds in the firm's portfolios. His announcement triggered investigations by the Securities and Exchange Commissionand the Commodities and Futures Trading Commission, and prompted Clinton to hire PricewaterhouseCoopers to examine pricing methods for all of its securities. The federal agencies have yet to announce any findings. In November, Clinton Group founder George Hall wrote to shareholders and said the PwC investigation showed no significant problems, but the reassurance did little.