Cohen May Close SAC To Investors To Avoid Firm's Prosecution

May 20 2013 | 5:15pm ET

SAC Capital Advisors may offer to return outside capital and become a family office to end the insider-trading investigation against it.

Firm founder Steven Cohen is considering a deal that would end one of the most storied runs for a hedge fund manager in history. Under a proposal that has been discussed with prosecutors, SAC would enter into a deferred-prosecution agreement that would require it to return outside capital and pay a fine, Bloomberg News reports. SAC would admit wrongdoing, but would not be prosecuted unless it again violates the law.

About $7 billion of SAC's $15 billion in assets belongs to Cohen, and the firm is bracing for another wave of redemption requests next month. Despite investors' move to quit the hugely-successful hedge fund, Cohen has until now resisted the idea of returning outside capital and managing only his own money.

SAC and Cohen have repeatedly denied any wrongdoing, although in March the hedge fund agreed to pay $616 million to settle two allegations of insider-trading. The firm had thought that deal had put an end to its most serious legal issues.

But several weeks ago, a grand-jury subpoenaed Cohen and several other SAC executives, indicating that prosecutors were pushing for charges against the hedge fund itself. SAC responded by ending its "unconditional" cooperation with the investigation.

Prosecutors face a July deadline to bring charges against either Cohen or SAC in the case against former SAC portfolio manager Mathew Martoma. Martoma, who has pleaded not guilty and who has refused to cooperate with the government, is accused of trading on confidential information about Alzheimers' drug trials. His is the first case that directly links Cohen himself to insider-trading, although Cohen has not been accused of knowing that Martoma's information was secret.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

As initial anxiety over Donald Trump’s victory gave way to market euphoria in the days following the election, there was a casualty. Gold prices.