Paloma Partners, the hedge fund founded by Donald Sussman, is opting to repay investors seeking to withdraw funds with a mix of cash and IOUs following a wave of redemption requests, according to a Wall Street Journal report.

The report cites a letter sent to investors as revealing that Paloma lacks sufficient liquid assets to meet withdrawal demands outright without compromising the diversification of its portfolio and its ability to maintain its investment strategy.

The hedge fund, known for its focus on quantitative trading, has seen assets under management shrink significantly. According to the letter, Paloma expects to begin 2025 managing approximately $1.7bn — down from nearly double that amount a year ago.

Paloma Partners has not yet commented on the report, and the Journal noted that Sussman has acknowledged the challenges facing the firm in the investor communications.