Shutting down its cornerstone funds left it with too little money to manage. Austin Capital Management is going out of business -- and not just pulling the plug on three of its hedge funds-of-funds, as it told investors late in April. The Austin, Texas-based asset manager lost a bundle it entrusted to New York-based Bernard Madoff.

Late last year, a group of Austin Capital's investors made it the target of a class-action suit for allegedly lax due diligence in assessing and monitoring Madoff, who has since admitted to having run a long-term, multi-billion-dollar Ponzi scheme.

Valediction

In an update sent to clients last Wednesday, Austin Capital wrote "that, after careful consideration, we have made the difficult decision to liquidate all of the Austin Capital Funds and to wind-down the business affairs of Austin Capital Management."

It goes on to explain that shuttering the three funds it identified on 24 April -- Austin Capital Safe Harbor QP, Austin Capital Safe Harbor Offshore and Austin Capital Safe Harbor ERISA Dedicated -- leaves it with too little in the way of assets to bother managing.

"We will retain a core team of critical employees to ensure that the Austin Capital funds are liquidated in an orderly fashion," the note, which is signed by investor relations director Will Gray, goes on to say.

Austin Capital is affiliated with Cleveland-based Victory Capital Management, which is a subsidiary of Cleveland-based KeyBank's parent Key Financial Corporation.

Austin Capital had $2.2 billion in assets under management on 6 March 2009, according to its latest -- and probably last -- ADV filing with the SEC. -FWR

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