SAC Trades Resemble Those Feds Call Insider Trading

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.

 


In Depth

Fitch Says Alternative Asset Managers 'Stable' Despite Dry Powder

Nov 20 2014 | 9:30am ET

Ratings agency Fitch says the outlook for seven publicly traded alternative asset...

Lifestyle

Cohen Buys $101 Million Sculpture

Nov 12 2014 | 9:17am ET

Steven Cohen was the sole bidder for a rare Alberto Giacometti sculpture at Sotheby...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.