SAC Opens Settlement Talks With Prosecutors

Sep 24 2013 | 10:05am ET

SAC Capital Advisors may be ready to cut a deal.

Lawyers for the embattled hedge fund told prosecutors last week that firm founder Steven Cohen would like to reach a settlement of the criminal insider-trading charges against SAC, as well as civil charges against him filed by the Securities and Exchange Commission. Until now, there has been no indication that SAC, which has pleaded not guilty and professed its innocence, was interested in a deal.

And any deal would come at a big price: Bloomberg Businessweek reports that a fine of about $1 billion is under discussion. Some sort of restrictions on Cohen, including possibly a bar from the securities industry, are also likely.

SAC was indicted in July; Manhattan U.S. Attorney Preet Bharara called the company "a veritable magnet for market cheaters" and accused it of running an insider-trading scheme for more than a decade, earning "hundreds of millions of dollars" illicitly trading on at least 20 different companies. The government was seeking billions in forfeitures from the firm, which is continuing to operate under a protective order agreed to with prosecutors.

While professing its innocence, SAC has also denied that it plans to substantially reduce its 1,000-strong workforce or give up managing outside capital. The latter decision has already been made for it, however, by investors, who have moved to withdraw substantially all of their money, leaving SAC with about $9 billion—most of it Cohen's. In recent weeks, SAC has laid off marketing and investor-relations staff and is considering a conversion to a family office, which will likely be a key plank of any deal with the government.

Any fine agreed to by SAC would be in addition to the $614 million settlement it struck with the Securities and Exchange Commission in March, to cover allegations stemming from the cases against former SAC portfolio manager Mathew Martoma and former SAC analyst Jon Horvath.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.