RiskFinancial CrimeSAC Capital to Agree US$1.8bn Insider Dealing Fine

SAC Capital to Agree US$1.8bn Insider Dealing Fine

US hedge fund SAC Capital will plead guilty to criminal insider trading charges and agree to pay a record US$1.8bn fine, according to a statement from federal prosecutors. In addition, the firm will close its investment advisory business and no longer manage money for outside investors.

The hedge fund, headed by billionaire Steven Cohen, has agreed to plead guilty to wire fraud and four counts of securities fraud and to close to outside investors, according to the US attorney’s office in Manhattan, which initially charged the firm in July.

In March,
SAC agreed to pay the Securities and Exchange Commission (SEC) about US$616m
 to settle civil charges related to alleged insider trading by employees. Prosecutors say that payment is credited to the amount owed for this guilty plea, meaning that the firm will pay a further penalty of US$1.2bn.

Cohen could potentially still face criminal charges of his own, since the agreement does not include any immunity for individuals at the firm. While he has not been charged criminally, the SEC filed civil charges against him in July, accusing him of failing to supervise employees who engaged in insider trading.

Outside investors have exited the fund this year as its legal problems have mounted. Prosecutors accused SAC of fostering a culture of law breaking in which employees sought out corporate insiders for illicit investment tips. The indictment excerpts a number of e-mails and instant messages from SAC traders, suggesting they had information from corporate insiders.

Related Articles

Why working in silos is a killer when battling financial crimes

Cyber Security & Fraud Why working in silos is a killer when battling financial crimes

3m Andrew Simpson
PSD2: dull name, but seismic effect

Clearing & Settlement PSD2: dull name, but seismic effect

5m Alex Kwiatkowski
Staying one step ahead: PSD2 and the future of fraud

Financial Crime Staying one step ahead: PSD2 and the future of fraud

6m Seth Ruden
8 predictions for treasury in 2018

Financial Crime 8 predictions for treasury in 2018

6m Bob Stark
FDIC sues 9 European banks over Libor

Banking FDIC sues 9 European banks over Libor

10m Victoria Beckett
Appreciating supply chain cyber risk

Cyber Security & Fraud Appreciating supply chain cyber risk

10m Peregrine Storrs-Fox
The death of the password: biometric banking

Automation The death of the password: biometric banking

10m Paul Sheldon Foote
The insecurity of fraud victims in the fight against cyber-assailants

Bank Relationships The insecurity of fraud victims in the fight against cyber-assailants

10m Keiron Dalton