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(Reuters) - Soros Fund Management LLC is withdrawing its money from William Ackman's Pershing Square Capital Management due to performance, according to a person close to the matter said on Thursday.
Pershing is in the process of returning the money, less than $250 million, to Soros by early 2014, the person said.
Ackman's Pershing Square lost 2.2 percent in July but is still up 3.8 percent year-to-date, three investors told Reuters earlier this week.
The redemption move by Soros has been in motion for quite some time, the person said, and comes during a bitter battle over nutritional-supplement company Herbalife Ltd., with Soros and Ackman on opposite sides.
Herbalife has been the subject of intense scrutiny for many months in the $2.25 trillion hedge fund industry, with several major players betting for or against the stock.
Ackman has a $1 billion bet that Herbalife shares will plunge to zero, contending that Herbalife is an illegal pyramid scheme. But as of July 30, Pershing Square had incurred at least $300 million in paper losses on its Herbalife trade.
The Soros Fund, meanwhile, increased its stake in Herbalife and it is one of its top holdings. George Soros is chairman of the firm but is not directly involved in day-to-day operations.
The New York Post reported that Ackman filed a complaint with regulators against Soros' family fund and unidentified co-conspirators alleging Soros' firm broke insider-trading rules by tipping hedge funds about its purchases of shares in Herbalife.
A Soros spokesman declined to comment on the complaint. A representative for Ackman and Ackman himself did not immediately respond to emails.
Editing by Dan Grebler