SAC's Cohen To Escape Criminal Charges

Jul 5 2013 | 10:12am ET

Years of investigation will not produce criminal charges against SAC Capital Advisors' Steven Cohen.

Federal prosecutors have concluded that they simply do not have enough evidence to indict the billionaire hedge fund manager, The Wall Street Journal reports. And facing a deadline this month to bring the most serious potential charges against him, the U.S. Attorney's Office in Manhattan expects it to come and go without charges.

Prosecutors had hoped that former SAC portfolio manager Mathew Martoma—who has been charged with what they call the most lucrative insider-trading scam in U.S. history—would turn on Cohen. But Martoma, who has pleaded not guilty and who is set to go on trial in November, hasn't implicated Cohen and refuses to cooperate.

Martoma's case was the first of the eight to date against current or former SAC employees to be linked directly to Cohen, who allegedly traded on Martoma's tips. But prosecutors were not able to establish that Cohen knew Martoma's information was illicit, received from a medical professor overseeing clinical pharmaceutical trials.

The failure to build a winnable case against Cohen is a blow to the Justice Dept. and Manhattan U.S. Attorney Preet Bharara, who has an unblemished record in the courtroom prosecuting insider-trading in recent years. But, even without criminal charges against its founder, the probe has taken a major toll on SAC, one of the most successful hedge funds in history. Since Martoma's arrest, rumors that either Cohen or SAC would be criminally charged have sapped the firm of almost all outside capital.

In addition, neither SAC nor Cohen are exactly out of the woods just yet. Prosecutors could still charge the firm, and could seek to prosecute Cohen for alleged incidents of insider-trading other than those allegedly involving Martoma, whose five-year statute of limitations expires this month.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this race. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

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

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

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.