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Billionaire Michael Platt's BlueCrest Capital Management is being investigated by a U.S. regulator over possible conflicts posed by an internal fund that manages money for the firm's partners, according to people with knowledge of the matter.

The Securities and Exchange Commission started the probe last year into what was once one of the world's largest hedge- fund firms, said the people, who asked not to be identified because the information is private.

The investigation is being overseen by a unit of the agency's enforcement division that focuses on potential violations involving asset managers, the people said.

BlueCrest has received queries from regulators since it announced in December that it would return all outside money to clients, the firm said in an e-mailed statement Friday

The company said it has been fully cooperative with those requests and has not been accused of any wrongdoing. SEC spokeswoman Judy Burns declined to comment.

The opening of an SEC investigation is typically a preliminary step and doesn't mean a firm will ever face an enforcement action. SEC cases must also be approved by a majority of the agency's commissioners.

BlueCrest chose to return investors' money, ending the firm's 13 years in the hedge-fund industry, so it could focus on managing Platt's wealth and that of his employees, including the employee fund. Platt, 47, said the decision was prompted by the declining fees and shrinking profitability of hedge funds.

The move came after BlueCrest investors pulled billions of dollars from the firm. Returns had lagged in recent years, and in 2014 a top consultant said the partner-only fund raised concerns that BlueCrest's interests weren't aligned with those of its investors.

"BlueCrest has received a number of queries, including from the SEC as well as from its other regulators," the firm said in its statement. "BlueCrest is fully co-operative with all of its regulators and to date has received no accusation of wrongdoing.

"BlueCrest is in the process of returning all client monies to its third party investors, and its dialogue with regulators is not expected to have an impact on this process. BlueCrest is a private investment partnership and its relationships with its regulators are confidential. As such BlueCrest intends to make no further comment on this matter."

Assets under management had fallen to about $8 billion in December, less than a quarter of the $37 billion the firm oversaw at its peak in 2013, according to statements from the firm and disclosures to investors.

U.S. public pension plans were among investors that redeemed. BlueCrest also lost about $9 billion of assets in January 2015 when a computer-driven unit separated from the firm.

The employee fund, called BSMA Ltd, sparked controversy when Albourne Partners Ltd. told its clients two years ago that it had just learned of the fund's existence.

Albourne, one of the biggest advisers to pension funds and other institutional investors, said BSMA had $1.5 billion of assets and that BlueCrest hadn't been sufficiently transparent when asked about potential conflicts.

Also in 2014, consulting firm Aksia suggested that the investors it advises pull their money from BlueCrest because of a lack of transparency.

BlueCrest Chief Financial Officer Andrew Dodd has defended the firm's disclosures to investors, saying in 2014 that they were adequate and that the proprietary fund had existed for years to help retain the firm's best employees. BlueCrest has procedures in place to protect against conflicts of interest across all of its hedge funds, he said.

In annual filings to the SEC, BlueCrest has long said that members of the firm may manage funds that only partners, employees or people connected with the firm invest in. The firm's disclosures have said that such funds may compete with client accounts in instances when they're investing in similar markets. Employee-only funds also "may produce investment results that are substantially different from those of our clients," BlueCrest said in a January 2015 filing.

When BlueCrest announced it would return outside money, about $1 billion of the $8 billion that the firm managed belonged to Platt and his partners, a person with knowledge of the matter said in December. The figures didn't include money in BSMA, which isn't considered part of BlueCrest's assets under management, the person said.

After clients get their money back, most of which is scheduled to be returned by the end of March, BlueCrest will still manage billions of dollars, according to the person.

Examining potential conflicts involving asset managers has been a priority for the SEC.

In October, SEC Chair Mary Jo White said in a speech that the agency's examiners had found instances in which hedge funds were running profitable trades and investments through "proprietary funds rather than client accounts in contravention of existing policies and procedures."

She was speaking generally and made no reference to any specific firm.