SAC to plead guilty in insider trading case: prosecutors

NEW YORK Mon Nov 4, 2013 1:13pm EST

1 of 2. An exterior view of the headquarters of SAC Capital Advisors, L.P. in Stamford, Connecticut, in this picture taken December 13, 2010.

Credit: Reuters/Mike Segar

NEW YORK (Reuters) - Steven A. Cohen's embattled hedge fund SAC Capital Advisors will plead guilty in federal court and pay $1.8 billion to settle charges stemming from an insider trading investigation that lasted more than five years, prosecutors said on Monday.

The two sides reached a settlement agreement which, if approved by a judge, would also resolve a civil forfeiture action against SAC and its affiliates, prosecutors said.

Sources have told Reuters the total settlement amount will include a $616 million penalty that SAC had already agreed to pay earlier this year to settle civil lawsuits by the U.S. Securities and Exchange Commission for insider trading will count towards the latest deal.

U.S. prosecutors in July charged the hedge fund - which managed as much as $14 billion this year before investors began withdrawing money - with presiding over a culture in which employees flouted the law and were encouraged to tap personal networks for inside information about publicly traded companies.

Though it won't necessarily end the effort, the deal will punctuate one of the longest-running, highest-profile insider trading investigations in recent years.

U.S. Attorney Preet Bharara will appear alongside April Brooks, who is in charge of the Federal Bureau of Investigation's criminal division in New York, at a press conference at 1 p.m. EST (1800 GMT) to discuss the deal.

Jonathan Gasthalter, a spokesman for SAC Capital, did not immediately respond to a request for comment.

SAC's founder Cohen is still facing an administrative action brought in July by the SEC accusing him of failing to properly supervise his employees. The case was stayed in August after the firm was indicted. It was not clear whether Monday's deal with prosecutors would resolve that case.

Cohen himself has not been charged with any criminal wrongdoing. The indictment against SAC includes charges of wire fraud and securities fraud, and named seven one-time employees of the firm who have either been charged or convicted of insider trading.

Since early this year, when the probe began to heat up, Cohen has been slowly returning money to outside investors and was widely expected to convert his operation to a family office, merely managing his own billions, by early next year.

(Reporting by Emily Flitter; Editing by Gerald E. McCormick and Jeffrey Benkoe)

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Comments (3)
tmc wrote:
Keep it up. We need stronger regulators and real painful settlements to keep the corporations in line. A whole lot more jail sentences would be a real good deterrent. Since corporations are “people too” then we need a better way to prosecute them as such.

Nov 04, 2013 11:23am EST  --  Report as abuse
Bugzy wrote:
So every fraudster should be spared jail and fined instead. All banks and hedgefunds have all committed corporate fraud. They get fined for massive fraud while small time individual fraudsters waste away in jail. Just fine every fraudster, make them pay the fine by working 2 jobs.

Nov 04, 2013 11:44am EST  --  Report as abuse
UScitizentoo wrote:
Amazing that no matter where you scratch these “investment” firms it always smells like crime. Cohen and the rest of his filth should be behind bars because trading this amount of money as if you DON’T have inside information is a racket of unprecedented proportions. The SEC can never catch all the insider trading. Never. So when they do find the 1% insider cases they need to drop the hammer and put the entire firm out of business, confiscate all profit and toss these investment “professionals” in prison for the rest of their natural born lives.

Nov 04, 2013 12:21pm EST  --  Report as abuse
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