Hedge-fund firm Tremont Group Holdings, which lost more than half of its assets to alleged scammer Bernard Madoff, is winding down operations and could shutter its doors by summer

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By KAJA WHITEHOUSE

Last updated: 12:31 pm
January 27, 2009
Posted: 2:46 am
January 27, 2009

Hedge-fund firm Tremont Group Holdings, which lost more than half of its assets to alleged scammer Bernard Madoff, is winding down operations and could shutter its doors by summer, sources tell The Post.

The Rye, NY, fund, which is owned by life-insurance company MassMutual, has cut its staff by about 40 percent, The Post has learned, and people familiar with the situation said some remaining employees have been told they may be let go in June with severance packages.

Tremont spokesman Montieth Illingworth declined to comment on the layoffs, but confirmed that the firm has closed its Rye Investment Management unit, which offered a line of single-manager funds, and which invested a whopping $3.1 billion with Madoff.

"While the Rye Investment Management unit is permanently suspended, it also retains the staff necessary to seek to recover any available Madoff assets," he said.

The formerly highflying hedge-fund firm had $3.3 billion out of $6 billion in assets invested with Madoff. In addition to the $3.1 billion invested through the Rye unit, $200 million - or 7 percent of the total - was invested with Madoff through the firm's fund of hedge funds business, known as Tremont Capital Management.

"We have focused the Tremont Capital Management fund of hedge funds business on our core strategies in trading, credit and relative value, and equities and retained the staff and infrastructure required to serve the interests and meet the needs of investors," Illingworth said.

The hedge-fund firm, which recently suspended investor-redemption requests, is working toward selling off the firm's surviving funds, sources tell The Post.

Illingworth declined to comment.

Also wounded by the Madoff scandal is hedge-fund firm Fairfield Greenwich, run by Walter Noel. It's lost $7.5 billion of its $14 billion in assets.

kaja.whitehouse@nypost.com