Banks Mull Relationships With Indicted SAC

Jul 25 2013 | 10:35am ET

SAC Capital Advisors has been charged with insider-trading, and appears poised to fight the allegations. But the legendary hedge fund may not survive to see its day in court.

While SAC proclaims its innocence and prepares its defense, its banks and counterparties are mulling the future of their relationship with the firm. Though SAC has little to fear from investor withdrawals—most outside clients have already filed to redeem their money—it cannot do business without the banks that provide it with trading, lending and prime-brokerage services.

Those banks, including Goldman Sachs and Deutsche Bank, are considering the feasibility of continuing to do business with a hedge fund under criminal indictment, Bloomberg News reports. And while SAC told clients yesterday that it would continue to operate normally, the loss of trading and servicing relationships would make that impossible.

SAC is a client of a host of major banks in addition to Goldman and Deutsche Bank. It is a major trading client of Morgan Stanley. In addition, it employs all three banks, as well as Barclays, Credit Suisse Group and JPMorgan Chase as prime brokers.

Prosecutors are seeking all of SAC's remaining assets in their case against the firm, while the Securities and Exchange Commission is seeking to bar firm founder Steven Cohen from trading.


In Depth

Q&A: Quad Advisors’ Borish Is Looking For Real Traders, Not Index Huggers

Aug 20 2014 | 1:43pm ET

Peter Borish, who served as founding partner and director of research at Tudor Investment...

Lifestyle

Viking Manager In Rent Dispute

Aug 11 2014 | 4:14am ET

A hedge fund manager is demanding most of his money back from his former landlord...

Guest Contributor

Majority Of Inflows Go To Brand Name Hedge Funds

Aug 12 2014 | 9:00am ET

Since the market correction of 2008, a vast majority of hedge fund net asset flows...

 

Editor's Note

 

Futures Magazine

PREVIEW July/August 2014 Cover

Inside Futures' 500th Issue

The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.

The Alpha Pages

TAP July/August 2014 Cover

Real talk on alternative investments, business & finance

The Alpha Pages Editor's Note