Tuesday, 9 February 2016
Last updated 3 hours ago
Sep 4 2013 | 12:35pm ET
SAC Capital Advisors is getting more serious about a potential future as a family office.
In spite of a criminal indictment for insider-trading and the possible seizure of all of its assets, SAC's founder, Steven Cohen, reportedly wishes to continue managing outside capital. But with substantially all of the hedge funds' investors having filed redemption requests, which will leave SAC managing almost entirely internal capital at the end of the year, the firm is now considering a move that would reduce its regulatory liability and might serve as the cornerstone of a settlement with the federal government.
According to CNBC, SAC management and its money-managers have held earnest talks about how the conversion to a family office would work. While SAC would likely maintain its current strategies, it is unclear whether the firm would take over Cohen's outside investments, notably in fine art and real estate.
Frequently, when hedge funds become family offices, they pare down staff and become more conservative. But according to CNBC, that's not necessarily going to be the case at SAC, which employs about 1,000 people. Some of its portfolio managers are expected to leave by early next year, but Cohen is expected to offer those that stay the 3% payout on top of bonuses that he paid last year.
Separately, a federal judge today put the civil forfeiture lawsuit against SAC on hold until next year.
Federal prosecutors filed that lawsuit alongside the criminal charges against the hedge fund, and then moved to delay its hearing, citing a fear that it would interfere with the main case. SAC has accepted the postponement, noting at today's hearing that prosecutors had turned over terabytes of evidence in the criminal case that are also germane to the civil case.
That appeared to assuage U.S. District Judge Richard Sullivan, who worried about "stopping this dead and starting from zero."
The next hearing in the case was set for Jan. 3, although it is unclear that the criminal trial against SAC will be completed by then.
For SAC's part, it welcomed the extra time, noting, "there's just a lot of discovery to get through." And prosecutors assured, "this is not a case where significant documents must be produced to have meaningful settlement discussions in the civil case."