SAC Speaks With Staff On Insider Case

Nov 30 2012 | 12:24pm ET

A day after moving to reassure investors about the insider-trading case enveloping the firm, SAC Capital Advisors sought to placate concerns among its employees.

The $14 billion hedge fund held a conference call for its roughly 1,000 employees yesterday to discuss the arrest of former portfolio manager Mathew Martoma and the likely fraud lawsuit the firm is facing. SAC received a Wells notice from the Securities and Exchange Commission last week, on the day Martoma was arrested, indicating that the regulator plans to take action against the firm.

The call with employees covered much of the same ground as Wednesday's call with investors; on that call, founder Steven Cohen and firm president Tom Conheeney said that Cohen acted appropriately when he accepted Martoma's advice on two pharmaceutical stocks and defended SAC's "culture of compliance." They also emphasized that the Wells notice did not name Cohen personally, although media reports indicate that the SEC hopes to extend the charges to him.

SAC has said that it is confident that neither it nor Cohen have done anything wrong.

The SEC isn't the only authority with an eye on Cohen. In fact, the lawsuit promised by the Wells notice could be months away, as the SEC gives the U.S. Justice Department time to build a possible criminal case against Cohen. The government has already sought the cooperation of Martoma, who has thus far declined.

Martoma was accused last week of earning SAC $276 million trading on confidential information about Alzheimer's drug tests.

The SEC has spoken to Cohen about Martoma's trades, which took place between 2006 and 2008. The agency deposed him earlier this year, but Cohen offered only vague recollections of a 2008 phone call he had with Martoma in which Martoma told him he was "no longer comfortable" with SAC's large positions in Elan Corp. and Wyeth LLC. Martoma allegedly sought the meeting with Cohen after learning that the drug tests had not gone well.

At least two other SAC employees were deposed by the SEC in the Martoma case, the Financial Times reports, including trading chief Phillipp Villhauer. According to court documents, Villhauer executed the trades that say SAC exit its huge Elan position in 2008, using algorithms and dark pools to hide the identity of the seller. Villhauer has not been accused of any wrongdoing.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

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.