New York (HedgeCo.Net) – As SAC Capital is nearing a deal to settle insider trading charges, it has been reported that the hedge fund, run by billionaire investor Steven Cohen, is close to a deal that would include more than $1 billion in fines and a guilty plea from SAC.
“The settlement would lift a big burden from Cohen both emotionally and financially. And it would come with no possibility of prison,” Former SEC enforcement lawyer Marc Powers, who is now head of the securities litigation and enforcement practice at BakerHostetler, said. “The big issue for the government is obtaining a lifetime ban for Cohen from the securities industry, which is less of an issue for Cohen who seems resigned to the idea of running a family office going forward.”
Some other issues to watch according to Powers include:
Whether Cohen has to cooperate with prosecutors by providing testimony at the two upcoming criminal trials. And if so, whether he receives immunity from what he says on the stand.
Will the SEC and the US Attorney get the admissions that they are seeking? More specifically that SAC failed to supervise properly, which resulted in insider trading. And an admission on a transaction more than five years old and potentially beyond statute of limitations for private party lawsuits against him.
Six SAC employees have already been criminally charged with insider trading, and two of them have pleaded guilty. A SAC affiliate has agreed to pay $615 million to settle SEC charges. FBI Assistant Director George Venizelos said: “SAC Capital and its management fostered a culture of permissiveness. SAC not only tolerated cheating, it encouraged it.”
Cohen himself has taken the 5th, declining to testify before a grand jury.
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