New York (HedgeCo.Net) – Hedge fund billionaire Steven A. Cohen has taken the 5th, declining to testify before a grand jury in the recent slate of insider trading allegations against traders at his firm SAC Capital.
The 5th amendment can be broken down into five distinct constitutional rights: grand juries for capital crimes, a prohibition on double jeopardy, a prohibition against required self-incrimination, a guarantee that all criminal defendants will have a fair trial, and a promise that the government will not seize private property without paying market value.
Since the investigation started nine traders current or former SAC employees have been linked to insider trading while working at SAC Capital, four of whom pleaded guilty.
“I wouldn’t have recommended that he go in to testify given how this looks like the government is trying to build a case around Cohen, rather than investigate one,” said Thomas Gorman, a partner at law firm Dorsey & Whitney LLP in Washington, according to Reuters. “It just seems that the government is reaching for a theory to support their beliefs.”
In a letter to investors in April, Steven Cohen put up a strong front against the onslaught of investigations, and instituted multiple reforms to their compliance team and procedures. “Our reforms are no panacea,” Steven Cohen said, “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.”
However, these changes and a $616 million fine, have not satisfied the investigators. Steven Cohen is said to be considering an agreement where SAC Capital Advisors LP would close the firm and admit wrongdoing. The hedge fund would not be prosecuted unless it broke the law again.
The 5-year statute of limitations will expire in July for the U.S. Attorney who is charging Cohen with illegally selling shares based on insider information.
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