Feds Taped Cohen's Calls In Insider Probe

Feb 29 2012 | 4:52pm ET

Federal authorities recorded several of SAC Capital Advisors founder Steven Cohen's phone calls in the early stages of their wide-ranging insider-trading investigation.

The wiretapped conversations—some from Cohen's Greenwich, Conn., home—with cooperating witnesses took place more than four year ago, Fox Business Network reports. While taped phone calls have been a key strategy for the Federal Bureau of Investigation in helping to build many of the 66 insider-trading cases brought in the last several years, Cohen's calls revealed no illegal activity.

Neither Cohen nor SAC has been accused of any wrongdoing, and it was not previously known that Cohen had been a target of the wiretaps. But the firm and its founder have been in the crosshairs for some time, with ongoing investigations into suspicious trading at SAC and several SAC traders and alumni going down for insider-trading as part of the current crackdown. Expert networker John Kinnucan, arrested earlier this month for allegedly tipping his hedge fund clients, reportedly refused to wear a wire in conversations with SAC when approached by the FBI. And Ponzi schemer Bernard Madoff has said that Cohen's illegal trading was "the-worst kept secret" on Wall Street.

In addition, Cohen's ex-wife, Patricia, accused him of insider-trading in a racketeering lawsuit she filed against him. That suit was dismissed, although Patricia Cohen is seeking to have it reinstated.

SAC has said it is cooperating with the federal insider-trading probe.

Last year, Cohen called insider-trading rules "very vague" in a deposition.


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