SAC, Prosecutors Negotiating Agreement On Operations

Jul 29 2013 | 12:47pm ET

Federal prosecutors will hold talks on a deal allowing SAC Capital Advisors to continue operating even as it defends itself against criminal fraud charges.

While no agreement has been reached and no terms are set, the two sides are negotiating, The Wall Street Journal reports.

Prosecutors plan to allow SAC to continue operating normally to protect the firm's investors, avoid chaos and confusion in the markets and to win a conviction before putting SAC out of business. The last major corporation to face criminal charges, Arthur Anderson, was cleared on appeal—but had gone under long before.

Bharara said last week that he had no plans to freeze SAC's assets and that his office is "mindful to minimize risks to third-party investors."

"We have not restrained any money, and we will discuss with the company a reasonable method going forward to protect everyone's legitimate interests."

For its part, SAC said last week, "We have been advised by the U.S. Attorney's Office that their action is not intended to affect the ongoing operations of SAC's business, prevent investor redemptions, or impact the interest of any of SAC's counterparties."

SAC has about $14 billion in assets under management, but employs leverage and has about $51 billion in market exposure. Investors have requested about $5 billion of the remaining money back; the few that remain can next file redemption requests on Aug. 16.

If the Manhattan U.S. Attorney's Office comes to believe that SAC is still engaged in unlawful behavior, it could impose tough restrictions on the firm, including one that would require it to get advance approval for major transactions. U.S. Attorney Preet Bharara has described SAC as a "veritable magnet for market cheaters" and called the insider-trading there "systematic."

And the prosecutor's office is not explicitly offering "comfort" to SAC's clients and counterparties, or indicating that there is no risk in continuing to do business with the firm, a law-enforcement official told the Journal.

SAC pleaded not-guilty to the charges on Friday.


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