Wednesday, 23 July 2014
Last updated 13 hours ago
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.
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…