Saturday, 26 July 2014
Last updated 13 hours ago
Sep 25 2013 | 12:21pm ET
Prosecutors may be willing make a deal to settle criminal charges against SAC Capital Advisors.
Lawyers for the embattled hedge fund met with prosecutors at the U.S. Attorney's office in Manhattan late last week. There, prosecutors proposed a settlement that would see SAC pay between $1.5 billion and $2 billion and plead guilty to criminal charges.
The talks are at an early stage, The Wall Street Journal reports. SAC is expected to present a counter-offer in the next few weeks; at the meeting last week, they pushed for a smaller settlement amount and insisted that the $616 million SAC paid earlier this year to settle Securities and Exchange Commission insider-trading allegations be counted against any settlement.
It is unclear what the impact of a plea deal would be; no major firm has ever survived a criminal indictment. But SAC could, even if the settlement barred it from serving as an investment adviser: Clients have moved to redeem substantially all of the firm's outside capital, leaving it managing primarily firm founder Steven Cohen's own capital. It could continue to manage that money—about $9 billion—even if the firm were barred.
Cohen has reportedly told staffers he's considered transforming SAC into a family office, even as he and the firm continue to deny any wrongdoing. Some top money managers at the firm have decided that such a transformation would not unduly affect their jobs, according to the Journal, although less-important managers could be laid off.
Cohen has told friends and associates that he hopes to settle the criminal charges in order to save SAC, the Journal reports. Authorities are continuing to investigate Cohen himself, as well.
In spite of the turmoil, the Journal says that Cohen's demeanor remains unchanged. He joked with friends about the situation at a party he threw the day after the indictment was announced in July—although he eventually asked attendees to change the subject. (SAC disputes that the exchanges occurred.) And top SAC executives have told people that they feel secure in their jobs at least through the end of this year, and Cohen has twice increased bonuses to retain staff.
Still, there are some concerns about morale: The month of the indictment, Cohen had a local "Super Duper Weenie" hot-dog truck visit SAC's Stamford offices to hand out free food to employees.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…