SAC Expresses 'Deep Remorse' In Bid For Settlement OK

Mar 28 2014 | 10:04am ET

SAC Capital Advisors has thrown itself on the mercy of the federal judge considering its $1.8 billion settlement of criminal insider-trading charges, urging her to approve the pact and allow the firm to move on as a family office.

In a letter to U.S. District Judge Laura Taylor Swain, SAC lawyer Martin Klotz wrote that "the defendants are deeply remorseful for the misconduct of each of the individuals who broke the law while employed by them. Even one person crossing the line into illegal behavior is unacceptable. The defendants are chastened by this experience, but are determined to learn from it."

Swain is expected to rule on SAC's settlement with prosecutors on April 10. Three days before that, SAC will formally change its name to Point72 Asset Management, part of a series of changes that seek to distance the firm from an insider-trading probe that has ensnared 10 former employees. A major restructuring also seeks to shield founder Steven Cohen from future insider-trading allegations, as well as to increase surveillance of traders to prevent it.

SAC, which has returned most outside capital, isn't putting itself entirely at Swain's mercy: Should the judge reject its pact with prosecutors, SAC has the option of rescinding its guilty plea.

Under the agreement, SAC will cease managing outside capital and become a family office, running Cohen's own fortune, as well as some employee money. The diminished firm will have about $9 billion in assets under management, down from about $14 billion.

"There can be no doubt that these and other penalties send a strong public message about the costs of the conduct that have brought the defendants before Your Honor," Klotz argued, pointing out that, should SAC have gone to trial, federal sentencing guidelines would have called for a maximum levy of $823 million, less than half what SAC agreed to pay.


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