Weekend Economists Escape to Cuba March 15-17, 2013

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11. SAC affiliates to pay $616 million to settle insider-trading case

http://www.washingtonpost.com/business/economy/sac-affiliates-to-pay-614-million-to-settle-insider-trading-case/2013/03/15/4de851c4-8d9c-11e2-b63f-f53fb9f2fcb4_story.html


STEVE MARCUS/REUTERS - Hedge fund manager Steven A. Cohen, founder and chairman of SAC Capital Advisors.

SAC Capital Advisors agreed to pay $616 million to resolve two civil lawsuits involving affiliates accused of insider trading, a massive settlement from the legendary and beleaguered hedge fund run by billionaire Steven A. Cohen.

The Securities and Exchange Commission announced Friday that CR Intrinsic Investors will pay $602 million, a record sum for an insider-trading case. The other affiliate, Sigma Capital Management, settled for nearly $14 million. Neither entity admitted nor denied wrongdoing, and their agreements await court approval.

For years the government has suspected SAC of profiting from illegal trading tips. At least five people have been accused of insider trading while they worked for the hedge fund. Federal authorities have never charged Cohen, but the government’s persistent scrutiny of his firm has sullied his mythical status in the hedge fund world.

The most damaging case was the one involving CR Intrinsic and one of its former portfolio managers, Mathew Martoma, who was charged by the government with running the most lucrative insider-trading scheme ever while working closely with Cohen.