Zoe Cruz, the former Morgan Stanley co-president, is closing her Voras Capital Management hedge fund and returning investor money, a source familiar with the fund said.
Cruz is said to have been struggling to raise anything beyond the initial $200 million she obtained from investors, the source said.
The source said the decision to return investor money was made recently and all clients would get their money "promptly."
Cruz's hedge fund, which began raising money and recruiting employees in 2009 formally opened in 2010, was down 8 percent last year, the sources added.
Last year, the average hedge fund manager was down 5 percent.
Cruz was not available to comment said a person answering the phone at her hedge fund.
In 2007, Cruz was ousted from Morgan Stanley after a long tenure with the Wall Street firm. At time, she was one of the highest-ranking women in the securities industry.
The source said Cruz is fielding job inquiries in the finance industry, but has not made any decisions.
(Reporting by Katya Wachtel)