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Alternative Market Briefing

SEC files civil suit charges against SAC's Steven Cohen over insider trading

Monday, July 22, 2013

Bailey McCann, Opalesque New York:

The Securities and Exchange Commission (SEC) has filed charges against hedge fund adviser Steven A. Cohen for failing to supervise two senior employees and prevent them from insider trading under his watch. The charges come after a rocky road for Cohen and his firm, following the largest insider trading settlement to date, of $600m over trades made by former employee, Matthew Martoma on drug makers Elan and Wyeth.

SAC Capital has been under close watch by regulators for a number of years, but the Martoma case provided a critical opening for investigation. Since then, the firm has seen waves of redemptions, but Cohen himself claims that the case is without merit and the firm remains sound. The SEC on the other hand, says that Cohen knew enough about Martoma and his cohort Michael Steinberg's bad trades to launch an internal investigation, and didn't.

"Instead of scrutinizing their conduct, Cohen praised Steinberg for his role in the suspicious trading and rewarded Martoma with a $9 million bonus for his work," the regulator said in a statement. Cohen’s hedge funds earned profits and avoided losses of more than $275 million as a result of the illegal trades.

The charges hinge on a 20 minute conversation between Cohen ......................

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