Billionaire Steven Cohen’s SAC Capital Advisors LP, the hedge fund firm accused of fostering a culture of rampant insider trading, has agreed to plead guilty to a federal indictment and pay $1.8 billion, the U.S. said.
The company, charged earlier this year, was accused of operating a conspiracy stretching back to 1999, reaping hundreds of millions of dollars in illicit profit. Cohen wasn’t charged and the Stamford, Connecticut-based firm has denied any wrongdoing. Cohen still faces an administrative action filed by the U.S. Securities and Exchange Commission for his alleged failure to supervise the hedge fund’s activities.
Including the $616 million that Cohen, SAC’s founder and owner, agreed to pay the SEC to settle a related lawsuit in March, the fund’s penalty comes to $1.8 billion.
The plea deal isn’t the end of the U.S. investigation of SAC or Cohen, who has been the target of the multi-year probe. Two insider trading trials in the next three months of managers at his hedge fund may shed more light on its internal workings, and prosecutors continue to investigate trading by SAC employees in Gymboree Corp., a children’s apparel maker, a person familiar with the matter said.
The SAC agreement provides “no immunity from prosecution for any individual and does not restrict the government from charging any individual for any criminal offense,” the government wrote in a letter today to U.S. District Court Judge Laura Taylor Swain.
Jonathan Gasthalter, a spokesman for SAC at Sard Verbinnen & Co., didn’t respond to requests for comment on the agreement.
SAC must agree to implement compliance procedures to prevent insider trading, the U.S. said. In the letter to the judge, Assistant U.S. Attorneys Antonia Apps and Arlo Devlin Brown said the $1.8 billion settlement is “to the government’s knowledge -- the largest financial penalty in history for insider trading offenses.”
SAC is pleading guilty to the entire indictment, prosecutors said, which is one count of wire fraud. Each of the four SAC funds is pleading to a count of securities fraud for a total of five criminal charges, the U.S. said.
The case is U.S. v. SAC Capital Advisors LP, 13-CR-00541. U.S. District Court for the Southern District of New York (Manhattan).