Common Sense Investment Management isn't shutting down, despite media reports to the contrary.
As CNBC.com reported in October , the once $3.7 billion Portland, Oregon-based hedge fund investment firm saw nearly all of its investors redeem following the arrest of founder Jim Bisenius for soliciting a prostitute.
(Read more: Investors flee fund after founder's prostitution bust )
On Wednesday, two media reports said the firm was becoming a family office for Bisenius, which suggested the 30-person shop would no longer manage outside capital. Those reports are inaccurate, according to Common Sense partner Scott Thompson.
"The Common Sense team has no plans to close its doors. Currently the firm is managing in excess of $100 million and has outside capital in the Common Sense Partners and Common Sense Long-Biased strategies which remain open to outside investors. Mr. Bisenius remains involved in the firm," Thompson said an emailed statement to CNBC.com, the first communication from the firm in months.
Thompson declined to provide the firm's current assets under management or other details.
One hedge fund that still manages capital on behalf of Common Sense and its clients is Dave Davidson's SC Management. The firm, which focuses on shorting stocks, manages $15 million overall.
"I'm happy that they are still in business and plan to rebuild.Besides the incident they are smart people and good investors and I feel fortunate that I still have some of their funds," Davidson said, citing a 10 year relationship with Common Sense.
Davidson's short-only Shoreline Fund fell 29.5 percent net of fees in 2013. The fund has produced net annualized returns of 9.13 percent since 2000.
Common Sense was one of the largest allocators to short-biased hedge funds; the firm's recent redemptions have hurt the few that survive.
(Read more: Short sellers see big chance-if they can survive )
-By CNBC's Lawrence Delevingne. Follow him on Twitter @ldelevingne .