Jefferies Winds Down Hedge Fund 352 Capital in Wake of Lawsuit

Jefferies Financial Group Inc. is winding down trading positions at its hedge fund 352 Capital, after the fund sued its former portfolio manager over an alleged fraud, according to people with knowledge of the matter.

Over the last few weeks, 352 has begun selling some of its asset-backed bonds and plans to unload more in the coming months, said the people, declining to be identified as the details are private. The portfolio will be unwound gradually in order to protect investors, one of the people added.

Investment firm Hildene Capital Management is advising the hedge fund, said the person. Jefferies’ ...