SAC President, Compliance Chief Subpoenaed

May 24 2013 | 1:40pm ET

Four top SAC Capital Advisors executives were subpoenaed alongside firm founder Steven Cohen last week.

SAC President Tom Conheeney, chief compliance officer Steven Kessler, chief operating officer Solomon Kumin and head trader Phillipp Villhauer were asked to testify before the grand jury considering criminal charges against the firm. Prosecutors hope that the men can help them understand SAC's internal information conduits, particular how Cohen gets the firm's best ideas, which become part of his personal portfolio, The Wall Street Journal reports. None of the subpoenaed men, including Cohen, have been accused of any wrongdoing, although both Cohen and Villhauer are referred to in the case against former SAC trader Mathew Martoma, who is charged with insider trading.

SAC agreed to pay $602 million to settle allegations stemming from Martoma's allegedly illicit trading, which the authorities say earned SAC $276 million.

"We don't think it is unusual that in this investigation, the government would interview our senior executives about how the firm operates," SAC said.

SAC told investors last week that it was ending its "unconditional" cooperation with the government investigation, after prosecutors indicated they were considering criminal charges against the firm and issued the subpoenas.

The hedge fund's lawyers last month made a list-ditch effort to avoid criminal charges against either SAC or Cohen. The lawyers sought the meeting, which took place in late April, after SAC reached the settlement with the Securities and Exchange Commission in March, in hopes that they could end the seven-year criminal probe of the firm. But prosecutors weren't impressed by the "aggressive presentation," Reuters reports.

SAC's lawyers presented a stock-by-stock, trade-by-trade analysis to show that Cohen had done nothing wrong, and warned that criminal charges against SAC would cost 1,000 jobs.

Prosecutors, facing a July deadline to file charges, are now considering charging SAC as a criminal organization under racketeering laws designed to crack down on the mafia and drug gangs. And Cohen is reportedly mulling an offer to turn SAC into a family office and return outside capital in exchange for a deferred-prosecution agreement.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR