SAC Capital in US$614mn settlement with regulators
Hedge fund settles US charges related to insider trading
By CFOWorld.co.uk staff | CFO UK | Published 11:34, 18 March 13
Hedge fund SAC Capital has agreed to pay a record US$614 million (£406.7 million) to the US Securities and Exchange Commission (SEC) as a settlement towards charges of insider trading.
However, the fund, managed by Wall Street heavyweight Steve Cohen, did not admit or deny the charges. The settlement was related to former trader Mathew Martoma, who stands accused of profiting from secret information about a drug trial being conducted by a pharmaceutical firm based on a tip-off he had received from a doctor, before the information was made public.
Martoma then allegedly shared the information with SAC Capital affiliates and sold US$960 million worth of shares in Elan & Wyeth, the company that made the drug. He is facing a criminal trial and has pleaded not guilty.
SAC Capital also stood accused of a separate incident at its Sigma Capital affiliate for insider trading in the shares of technology firms Dell and Nvidia. It is thought that US$600 million and US$14 million were allocated to the Martoma and Sigma Capital incidents respectively.
The SEC said, "The settlement does not preclude any such charges against any person, including Steve Cohen. We can't tolerate a market rigged for the benefit of insiders and their cronies."
SAC Capital manages a hedge fund worth US$15 billion. In a statement, it said, "This settlement is a substantial step toward resolving all outstanding regulatory matters and allows the firm to move forward with confidence. We are committed to continuing to maintain a first-rate compliance effort woven into the fabric of the firm."
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