Backers of the Glazer family's controversial £690m takeover of Manchester United are having as much trouble off the field at the club is having on it.
In the seven months since the Glazers assumed control, Man Utd has lost its main sponsor, been knocked out of the Uefa Champions' League and is out of the Premiership title race.
However, things are, if anything, worse for two of the hedge funds that provided a large part of the £275m of preference-share funding for the deal.
The New York-based Perry Capital is facing regulatory action for its role in a failed merger. And the Chicago-based Citadel Investments has angered investors by imposing penalties on them for trying to withdraw funds after a poor performance.
Perry, a $10bn (£5.6bn) fund founded by former Goldman Sachs banker Richard Perry, last week admitted it had received a "Wells notice" from US regulator the Securities and Exchange Commission. This says the agency's staff are recommending an enforcement action against Perry unless it can offer reasons why it should not.
The SEC's unhappiness relates to Perry's role in the failed merger of Mylan Laboratories and King Pharmaceuticals in 2004. Perry bought major stakes in the two businesses, and used its votes in favour of the deal. However, it also used complex financial instruments to eliminate its financial risk on the Mylan stake.
This device has led to Perry being sued by another investor - a hedge fund run by arch dealmaker Carl Icahn - and has now brought the wrath of the SEC.
Perry, in a letter to investors last week, said: "We believe we have acted properly at all times and with the advice of counsel."
Citadel, which has more than $12bn under management, has suffered a poor year by its usually stellar standards. Instead of the 26 per cent annualised return investors have been used to, its funds rose by just 1.5 per cent in the first 11 months of 2005. But a recovery in December brought the annual return to between 6.5 per cent and 7.5 per cent.
Investors are understood to have wanted to withdraw as much as $1.2bn of funds from Citadel, but they have been told that it will impose redemption fees.
This has led some investors to reverse their decision but has brought expressions of frustration from others.
Citadel has said claims in reports that up to 10 per cent of investors want to withdraw money are overstated, but it declined to speak to The Independent on Sunday.Reuse content