SAC evidence includes court-authorized wiretaps, U.S. says

‘Important Evidence’

Wells told the judge today that the defense is talking to prosecutors to obtain statements made by the SAC employees who are cooperating with the government.

The defense was “most concerned about the statements we are entitled to receive,” Wells said. “That’s the most important evidence we want to review.”

He declined to comment after the hearing, as did Martin Klotz, another SAC lawyer.

Under the criminal case, each of the SAC units charged faces a maximum of at least $25 million or twice the profits made or losses avoided on each of the alleged crimes.

A separate civil forfeiture action filed by Bharara’s office yesterday alleges SAC engaged in money-laundering by commingling insider trading profits with other assets and using the money “to promote additional insider trading.”

Posing Challenges

If it obtains a conviction, the U.S. could seek to recover not only the hundreds of millions of dollars generated by the insider trading, but also the entire pool because the funds are tainted and subject to forfeiture. The court action could result in the firm’s dissolution.

Prosecuting an entity will pose challenges for the government, a lawyer said.

“On the one hand, the government will be prosecuting an empty chair that can’t respond to the allegations like a person would,” said John J. Carney, a former federal securities fraud prosecutor and U.S. Securities and Exchange Commission attorney now at Baker Hostetler LLP who isn’t involved in the SAC case. “On the other hand, the government may be prosecuting an empty chair that the jury may not care about.”

When the hearing concluded, SAC’s defense team crowded into an elevator and silently rode to the main floor. Wells left the building with colleagues from Paul Weiss Rifkind Wharton & Garrison LLP. Klotz departed with fellow Willkie Farr & Gallagher LLP partner, Michael Schachter. Schachter prosecuted Martha Stewart for conspiring to obstruct justice by lying to the U.S. in 2004, when he was a U.S. attorney for the Southern District of New York.

Confusion erupted as car services hired to ferry the defense team away from the courthouse failed to appear on nearby Worth Street. As lawyers crossed the street, they were encircled by television cameramen, reporters and photographers.

“Who’s that?” a court visitor asked reporters.

“That’s a hedge fund walking out of court after pleading not guilty to insider trading,” one responded.

The case is U.S. v. SAC Capital Advisors LP, 13-00541, U.S. District Court, Southern District of New York (Manhattan).

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