SAC To Face Criminal Charges

Jul 24 2013 | 12:43pm ET

Federal prosecutors are poised to hit SAC Capital Advisors with criminal insider-trading charges.

The allegations could come as soon as this week, as the U.S. Attorney's Office in Manhattan races to file them before the statute of limitations expires on some of the more serious potential charges against the firm, and would follow the Securities and Exchange Commission's related lawsuit against SAC founder Steven Cohen for failure to supervise his employees, which was filed last week.

The charges could put an end to the legendary hedge fund, which managed $15 billion in assets at the beginning of the year, before investors began to race for the doors amidst the insider-trading allegations. No major financial firm has ever survived a criminal indictment, and there is no indication that the hedge fund was in settlement talks to avert one.

The potentially-devastating indictment would come just weeks after SAC's legal matters appeared to clear somewhat; The Wall Street Journal reported earlier this month that prosecutors would not seek to indict Cohen himself. Prosecutors, the Federal Bureau of Investigation and the SEC have been investigating SAC for years, and some eight current or former SAC employees have been charged. And charges could serve as a death sentence for Cohen's hopes to rebuild his firm's asset base with outside capital, and could lead to layoffs at the firm, which employs about 1,000 people.

SAC has vigorously defended itself and Cohen, denying any wrongdoing. Yesterday, the firm issued a 46-page white paper disputing the SEC's allegations against Cohen while simultaneously calling into question whether the firm's employees engaged in illegal insider-trading.

Cohen is still said to be safe from possible criminal charges, but others at SAC may not be, The New York Times reports. The two SAC traders at the center of the failure to supervise allegations against Cohen, Mathew Martoma and Michael Steinberg, have both pleaded not guilty and have refused to cooperate with prosecutors.


In Depth

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note