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Alternative Market Briefing

SAC to wind down advisory business in $1.5bn plea deal

Monday, October 21, 2013

Precy Dumlao, Opalesque Asia:

From Precy Dumlao, Opasque Asia – SAC Capital, the hedge fund run by billionaire Steven A. Cohen, could close its advisory business and stop managing money for outside investors if the $1.5bn plea agreement with the Securities and Exchange Commission pushes through.

According to the New York Times, the closure of SAC Capital’s advisory business is part of the plea agreement with the government with the aim of resolving the alleged insider trading case against SAC Capital. Under the deal, SAC Capital is required to enter a guilty plea to criminal misconduct and pay a penalty up to $1.5bn.

Once the deal is sealed SAC Capital will cease to function as an investment adviser although this is seen by many insiders symbolic in nature as the hedge fund has already returned billions of dollars to investors since the government announced it was investigating the company for alleged involvement in insider trading.

Cohen has already indicted in the past that he intended to operate SAC Capital as a family office as at least $8bn of the hedge fund’s $14bn assets is his personal wealth with nearly $41bn belonging to his employees.

A separate report by the Telegraph said that the more than $1bn penalty being......................

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