Wednesday, 30 July 2014
Last updated 16 min ago
Feb 18 2011 | 11:04am ET
Steven A. Cohen’s hedge fund, SAC Capital Advisors, reported almost tripling its stake in Hilton Hotels three days before Blackstone group announced its 2007 buyout of the company, according to Bloomberg.
The news agency asked New York Law School associate professor Houman Shadab to review SAC’s holdings in stocks that have been identified by prosecutors as subjects of insider leaks.
The results show the Hilton trade was one of at least 11 occasions on which SAC traded stocks near the time of what prosecutors are calling insider trading in the same shares by other funds.
“While the trades by themselves don’t prove insider trading or fraud, they are consistent with patterns federal investigators are examining based on trading of nonpublic information,” Shadab told Bloomberg.
Prosecutors subpoenaed SAC in November, but have not accused the company or any current employees of wrongdoing.
In the case of the Hilton shares, the stock soared 26% on the trading day following the July Blackstone announcement. SAC reported liquidating 99% of its stake by that September 30. Federal prosecutors allege Galleon Group co-founder Raj Rajaratnam's acquisition of Hilton shares on the day the Blackstone deal became public was based on an illegal insider tip.
SAC's Hilton buy was disclosed in a Securities and Exchange Commission filing.
Two former SAC portfolio managers, Noah Freeman and Donald Longueuil, are among the four hedge fund employees charged with insider trading in the Justice Department's massive investigation.
SAC released a statement on February 8 saying it was “outraged” by the alleged “egregious violations of our ethical standards” by Freeman and Longueuil. The two left SAC in 2010 “due to poor performance.” The government alleges their illegal conduct took place between 2006 and 2010.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…