Man Group, the world's largest publicly traded hedge fund, said Wednesday that managed assets fell 21 percent in the third quarter and that it was considering legal action over its exposure in the alleged Madoff fraud.
Man Group said clients' funds under management at the end of December were $53.3 billion _ down from $67.6 billion at end-September.
The group last month wrote off completely its $360 million invested in two funds that are directly or indirectly linked to former Wall Street trader Bernard Madoff.
"We are actively reviewing all options to recover assets for our investors," a Man Group spokesman said, requesting anonymity on company policy, when asked about reports the firm intended to sue Madoff.
"We are in regular dialogue with our institutional investors through RMF about this process and the way forward," the spokesman said, referring to its predominantly institutional fund of funds through which Man Group was exposed to the global fraud.
Britain's Serious Fraud Office opened an investigation into the British business operations of Madoff earlier this month, raising the prospect that the alleged Wall Street fraudster could face criminal charges here.
Madoff, 70, was arrested Dec. 11 on securities fraud charges alleging he duped investors out of as much as $50 billion in a giant Ponzi scheme. The former Nasdaq chairman is under house arrest on $10 million bail in New York, and his assets have been frozen.
Man Group chief executive Peter Clarke said that the outlook for markets in 2009 remains uncertain as the company revealed continuing outflows.
"The outlook for institutional sales remains very subdued in the short term and continued institutional redemptions mean that we will see institutional net outflows until markets stabilize and confidence returns," he said.
The group said the main reason for the fall in funds under management over the third quarter was its decision to "de-risk" its MGS unit's product range and rebalance those products.
Man Group's third quarter redemptions were up 75 percent at $6.3 billion from the same quarter a year earlier, while sales dropped 26 percent to $4.2 billion.
The group's share price dropped 7 percent on the London Stock Exchange to 210 pence ($3.05).