NEW YORK (Reuters) – Level Global Investors, one of the hedge funds raided by U.S. agents last November in a broad investigation into insider trading, told investors it would begin the process of winding down.

The New York and Connecticut-based hedge fund, which managed roughly $3 billion as of December, said in a letter to investors on Friday that it would liquidate the funds and return its cash to investors.

“The government has commenced what may be a lengthy inquiry with no set timeline. This process, even when it leads to the positive outcome that counsel expects, nonetheless threatens to undermine our ability to meet our fiduciary responsibility to our investors,” one of the firm’s co-founders, David Ganek, said in a copy of the letter seen by Reuters.

The fund said last year that its investors, which include big pension funds like the New York State Common Retirement fund, were not racing for the exits. But it recently extended its deadline for investor redemptions.

Based on the new terms for investors, about 75 percent of the fund’s capital would have been eligible to leave on March 31, and 100 percent would have been eligible to exit on June 30, Ganek said in the letter.

Hedge fund blog Dealbreaker.com, citing people familiar with the fund, reported earlier on Friday that Level Global had received about $750 million in redemption requests from investors.

“With the continuing cloud of uncertainty, we understand why investors might elect to redeem in the current environment,” the letter said.

NEW YORK, Feb 10 (Reuters) – Hedge fund company Och-Ziff Capital Management Group (OZM.N: Quote, Profile, Research, Stock Buzz) said quarterly earnings rose almost 8 percent, topping expectations, as a rise in its assets under management boosted management fees.

The company said distributable earnings per share for the fourth quarter were $303.1 million or 74 cents per Class A share, compared to $281.4 million, or 69 cents per share in the same quarter a year earlier.

Analysts polled by Thomson Reuters I/B/E/S expected the company to earn 66 cents per share in the quarter.

The New York-based firm reported a net loss of $22.8 million, or 24 cents per share, largely related to expenses from its 2007 initial public offering.

The firm had said that its flagship OZ Master Fund returned 8.5 percent in 2010, while its Europe Master Fund rose 7.5 percent, its Asia Master Fund climbed 9.9 percent and its Global Special Investments Master Fund was up 13.4 percent. By comparison, hedge funds on average returned about 4.5 percent in 2010 according to Hedge Fund Research’s HFRX index.

Och-Ziff said earlier this month its unaudited assets under management were $28.4 billion, as of Feb. 1, compared to $27.6 billion as of Jan. 1. (Reporting by Emily Chasan, editing by Dave Zimmerman)