Friday, 1 August 2014
Last updated 8 hours ago
Oct 17 2013 | 3:18pm ET
SAC Capital Advisors has reached a deal with federal prosecutors to settle the criminal insider-trading charges against it.
The embattled hedge fund is set to pay a record fine, in excess of $1 billion, although the exact amount is unclear. The Wall Street Journal reports that the payment will be between $1.2 billion and $1.4 billion.
Prosecutors were seeking a $1.8 billion settlement, although SAC's lawyers argued that the $616 million it paid last year to settle insider-trading charges should be deducted. The Journal reports that its settlement figure does not include the earlier payment.
The government also planned to insist on a guilty plea; the fate of that term is unclear. It is also unclear how long SAC would be barred from managing outside capital.
It is also unclear whether the settlement would cover the Securities and Exchange Commission's lawsuit against firm founder Steven Cohen for failure to supervise his employees, a half-dozen of whom have pleaded guilty to insider trading. It would not affect the ongoing criminal probe into Cohen himself. As part of the deal, Cohen has agreed to a temporary ban on managing client money.
The agreement is tentative and could still fall apart, according to published reports. Prosecutors have reportedly given SAC until the November beginning of the trial of firm portfolio manager Michael Steinberg on insider-trading charges to reach a deal.
SAC was indicted in July, and prosecutors indicated that they would seek to seize "substantially all" of SAC's assets, expected to be about $9 billion, most of it Cohen's money, at the end of the year. Investor redemptions are likely to leave SAC with little or no outside capital.