By Katya Wachtel

NEW YORK (Reuters) - Investor redemptions from Steven A. Cohen's SAC Capital Advisors continue to mount, with Magnitude Capital emerging as the latest outside investor asking to get money back from the $15 billion hedge fund.

Magnitude Capital, a fund of hedge funds that manages $3.1 billion of client money, began redeeming funds in the first quarter of this year and intends to submit another withdrawal notice for the second quarter, according to a person with knowledge of the investment.

Cohen's firm also recently received withdrawal requests from two large institutional investors, Blackstone Group LP and Ironwood Capital, as an insider trading probe focusing on Cohen's firm moves forward.

SAC Capital's second-quarter redemption deadline is Monday June 3.

Magnitude's investors will have their money back from Cohen's hedge fund by the end of the year, according to that person and another person familiar with the investment.

Several calls to partners at Magnitude Capital were not returned. A spokesman for SAC Capital declined to comment.

It was not immediately clear why Magnitude had decided to take back its money. The amount of money the firm has with SAC Capital also is not known.

Blackstone, which is the largest outside investor in Cohen's fund, has decided to redeem a significant portion of its roughly $550 million allocation to SAC, according to a letter from pension consulting firm Russell Investments, which Reuters earlier reported on.

The letter said Blackstone decided to submit a redemption notice to SAC Capital after reviewing the terms of a $616 million agreement SAC Capital reached in March with the U.S. Securities and Exchange Commission to settle allegations that the hedge fund's employees had engaged in insider trading in four stocks.

San Francisco-based Ironwood notified SAC last week it would be taking $100 million from the fund because of changes in access to information about the ongoing insider trading probe.

The decision by Blackstone, which manages $46 billion in hedge fund investments for pensions, companies, foundations and wealthy individuals, is seen as critical to Cohen in his attempt to prevent all of his outside investors from fleeing.

With $550 million in outside money invested in SAC Capital, Blackstone is Cohen's largest outside investor and one of his most loyal, having stayed with the fund throughout the long running insider trading investigation.

Blackstone already has submitted a notice to redeem about $295 million in money invested in SAC Capital through of its investment funds. Blackstone is also expected to submit redemption notices for most of the remaining $255 million it manages for pensions and corporations in separately managed accounts, according to people familiar with the money manager.

Outside investors in SAC Capital account for roughly $6.75 billion of the $15 billion managed by Cohen. In the first quarter, outside investors told Cohen they intended to withdraw about $1.7 billion of that $6.75 billion by the end of the year.

Even as the list of outside investors taking out money continues to grow, it is still unclear how other clients of the fund will proceed.

It is not clear for example what other large outside investors like Morgan Stanley and HSBC plan to do. HSBC declined to comment. Morgan Stanley did not return a request for comment.

Cohen himself has not been charged with wrongdoing, but the probe is seen as increasingly focusing on him and his firm. Earlier this month federal authorities issued grand jury subpoenas seeking testimony from Cohen and other executives at SAC.

"I think the pressure on the hedge fund to ultimately allow everyone to get their money out in a relatively short period of time is going to become an irresistible force that they're just going to have to cede to," said C. Evan Stewart, a partner at Zuckerman Spaeder in New York who specializes in securities litigation and regulatory enforcement matters.

(Reporting by Katya Wachtel; additional reporting by Emily Flitter and Sam Forgione; Editing by Gerald E. McCormick, Matthew Goldstein and David Gregorio)

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