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Insider Trading Fells SAC

First JPMorgan Chase agrees to accept fault for manipulating the market, then SAC Capital Advisors makes financial history the wrong way — by accepting a record $1 billion fine and agreeing to admit to insider trading charges. 

In July, the Federal Bureau of Investigation (FBI) announced insider trading charges against SAC Capital companies. The FBI charges include: 

  • Criminal allegations of insider trading by multiple parties for a period of ten years involving securities of more than 20 publicly traded companies from different sectors of the economy.
  • Widespread institutional practices at SAC companies supported the use and exchange of inside information. These practices allowed SAC companies to obtain hundreds of millions of dollars in illegal profit at the expense of investors and the investing public. 

Eight SAC operatives have been charged or convicted of insider trading. The SAC Hedge Fund rewarded employees for profits obtained through insider trading, deployed limited compliance measures and recruited individuals to use their networks for insider trading. 

Preet Bharara, United States attorney for the Southern District of New York, said the SAC Hedge Fund strategy “was substantial, pervasive and on a scale without known precedent in the history of hedge funds.” 

Without the settlement, former employees charged by the FBI could testify against the hedge fund, creating additional liabilities and causing a more precipitous business decline than already experienced by hedge fund manager Steven Cohen. Settlement of these charges do not preclude further charges against Mr. Cohen personally for failing to supervise his employees or create a more rigorous atmosphere of compliance at his companies. 

It is new day on Wall Street. If facing questions or an investigation, talk to an experienced securities litigation firm in midtown Manhattan. 

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