Saturday, 26 July 2014
Last updated 20 hours ago
Mar 28 2013 | 11:42am ET
A federal judge put the brakes on SAC Capital Advisors' $616 million settlement with the Securities and Exchange Commission, saying he needed more time to consider it.
U.S. District Judge Victor Marrero expressed unease at approving the larger portion of the deal, a $602 million settlement of allegations that former SAC portfolio manager Mathew Martoma earned the hedge fund $276 million trading on tips about Alzheimer's drug tests. While Marrero said he saw no reason to question the "legitimacy" of the settlement, he worried about the possible impact of an upcoming appeals court decision dealing with the SEC's practice of allowing settlements without admissions of wrongdoing.
The U.S. Second Circuit Court of Appeals in New York is currently considering whether U.S. District Judge Jed Rakoff, one of Marrero's colleagues in the U.S. District Court for the Southern District of New York, went to far when he rejected a settlement between the SEC and Citigroup over a mortgage-bond deal because the bank was allowed to neither admit nor deny wrongdoing. A ruling in that case is expected within several months.
"The ground is shaking," Marrero said. "There are some tremors."
The SEC insisted that its policy is sound and had been long resolved. SAC expressed concern both about the delay and about the prospect of having to admit wrongdoing. Martin Klotz, a lawyer for SAC, said that the firm wasn't yet in a position to know whether the allegations that led to the $602 million settlement with its CR Intrinsic Investors unit were true, because Martoma has pleaded not guilty and is still awaiting trial.
"We would like to settle this case now," Klotz said. "We don't want this hanging over us."
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…