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

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.