Ellington Management Group LLC, an Old Greenwich, Conn., investment firm that focuses on mortgage securities, plans to split its flagship hedge fund and has dismissed 10% of its employees, people familiar with the matter said last week.

Hard-to-sell assets of Ellington Overseas Partners Ltd. will be put into a separate fund, where they will be sold over time, said the people, who did not want to be identified. Ellington employed about 160 people.

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