New York (HedgeCo.Net) – Investigations of insider trading by the S.E.C. and the U.S. Attorney’s office have haunted Hedge Fund SAC Capital and it’s manager, and 117th richest man in the country, Steven A. Cohen, for the last few years. In a letter to investors this week Steven Cohen addresses these issues.
SAC manages $15 billion, and since this investigation was started nine people with who worked for SAC have been tied to insider trading. In March of 2013 Steven Cohen brokered a deal with the S.E.C to settle the insider trading allegations for $616 million, as part of the settlement there will be no further sanctions by the S.E.C and no admission of wrongdoing on the side of SAC.
In a letter to their investors Cohen addressed the insider trading head on, and announced ways that they were implementing new processes to stop this from happening again. SAC plans to increase compliance staff to 45 people as well as limit contact between SAC traders and and public company employees.
“Our reforms are no panacea – it is not possible to stop someone intent on breaking the law – but these reforms send an unmistakable message: we have zero tolerance for wrongdoing and if you are caught breaking the rules, it will cost you”
Many in the industry stand behind SAC Capital. In an interview with Vanity Fair Anthony Scaramucci, SAC investor and organizer of the SALT Conference said: “Activity that was acceptable no longer is. Steve made the appropriate adjustment, The government has had years to prove its case. If they could, they would have done it by now.”
Despite the investigation, SAC Capital still performs well for those invested in their funds. The profits stood at 13 percent for the year of 2012. This return is after the large 3% management fee and up to 50% incentive fee that SAC Capital charges.
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