U.S. files criminal charges against SAC

CARLO ALLEGRI/REUTERS - People walk past a building that includes SAC Capital as a tenant in New York on July 25, 2013. Federal prosecutors filed criminal charges against the hedge fund, citing “institutional practices” that allowed for several employees to engage in insider-trading.

By Jia Lynn Yang, Updated: Thursday, July 25, 7:33 AM E-mail the writer


Federal prosecutors unveiled criminal charges Thursday against SAC Capital, the famed hedge fund, citing “institutional practices” that allowed for several employees to engage in insider-trading.
The government charged SAC Capital with wire fraud and four counts of securities fraud. The indictment cites activity that occurred from about 1999 to as recent as 2010, saying employees at the hedge fund engaged in a “pattern” of obtaining inside information from dozens of publicly traded employees.

Gallery

Major white-collar crimes in U.S. history: Here’s a look at some of the unforgettable white-collar crimes in the nation’s history.

“Unlawful conduct by individual employees and an institutional indifference to that unlawful conduct resulted insider trading that was substantial, pervasive and on a scale without known precedent in the hedge fund industry,” said the indictment.
The charges did not target the firm’s founder, Steven A. Cohen, although they do mark a new nadir for the billionaire’s career.
Criminal charges against the firm could mark the end of SAC, which has already seen investors steadily pull out their money after its legal troubles began to bubble up a few years ago.
In a massive insider-trading investigation that has ensnared several other firms, SAC is the most ambitious target yet. The hedge fund and its billionaire founder are symbols of Wall Street at its most successful — and most excessive.
SAC, based in Stamford, Conn., at its peak managed $15 billion in assets. It charged its clients more than the industry standard and performed especially when markets were down.
Cohen, whose initials form the name of his company, is known for running a cutthroat office. He is also known for his lavish spending habits. Earlier this year, he paid $155 million for the Picasso painting “Le Rêve,” the most on record for a U.S. collector. In the same month, he also bought an oceanfront property in East Hampton, N.Y., for $60 million.
Earlier this month, the Securities and Exchange Commission accused Cohen of failing to supervise Martoma and Steinberg, two of the SAC portfolio managers accused of insider trading. But the agency did not charge him with fraud or insider trading.
In that civil case, the SEC is seeking to demonstrate that Cohen received suspicious information that should have tipped him off to wrongdoing at his firm.

http://www.washingtonpost.com/business/economy/us-files-criminal-charges-against-sac/2013/07/25/57f6eee2-f533-11e2-aa2e-4088616498b4_story.html