SEC considering fund for SAC Capital insider-trading victims

The U.S. Securities and Exchange Commission is considering establishing a victims’ fund with the $602 million that SAC Capital Advisors LP paid to settle an insider-trading case brought by regulators.

The SEC told the Manhattan federal judge overseeing the case that it has been in contact about the “fair fund” with shareholders in Elan Corp. Plc and Wyeth LLC, who claim they suffered losses as a result of an insider-trading scheme of convicted former fund manager Mathew Martoma.

Martoma was sentenced last month to nine years in prison after being convicted of making $275 million for SAC by using illegal tips to trade in the pharmaceutical companies, the most lucrative insider-trading scheme in history.

SAC Capital, now called Point72 Asset Management LP, agreed to pay $602 million to settle the regulators’ suit. The money was part of a $1.8 billion payment which SAC paid to the U.S. to settle criminal and civil cases.

“The commission is currently determining whether it should recommend to the court that a fair fund be established in this case,” Charles Riely and Matthew Watkins, lawyers for the SEC, said today in a letter to Marrero. “To aid in making that determination, we have contacted certain parties asserting they have an interest in whether the total judgment is distributed to various claimants or paid to the U.S. Treasury.”

Regulators said they have received more than 40 written submissions from shareholders in Elan and Wyeth who have an interest in how the funds are handled.

Deadline Dates
The judge gave the commission until Oct. 30 to notify potential victims about the fund and until Nov. 14 to notify the court about its decision on how the money will be disbursed.

The SEC case is Securities and Exchange Commission v. CR Intrinsic Investors LLC, 12-cv-08466, U.S. District Court, Southern District of New York (Manhattan); the suit by Elan shareholders is Kaplan v. SAC Capital Advisors, 12-cv-09350, U.S. District Court, Southern District of New York (Manhattan).

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