Thursday, 29 January 2015
Last updated 7 hours ago
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.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…