Thursday, November 7, 2013

SAC Capital agrees to plead guilty to insider trading charges

SAC Capital agrees to plead guilty to insider trading charges
Hedge fund to pay $1.8bn in penalties as part of deal that regulators say they plan to use as a warning to other companies
Heidi Moore in New York, Monday 4 November 2013 15.04 EST         
has become the first hedge fund to plead guilty to insider trading after an extensive six-year dragnet by government regulators, who issued a warning to future "Gordon Gekkos" and imposed fines that totalled $1.8bn.

"No institution should rest in the belief that is too big to jail," said Preet Bharara, the US attorney for the southern district of New York. "That is a moral hazard."

April Brooks, who heads the New York field office of the FBI, said the proposed settlement should act as a warning to "those who venerate Gordon Gekko", referring to the Machiavellian capitalist in the 1987 movie Wall Street who popularized the phrase "greed is good".

SAC has agreed to a passel of penalties, which follow a July indictment by Bharara's office. It must pay a $900m fine and forfeit another $900m to the federal government, though $616m that SAC companies have already agreed to pay to settle parallel actions by the US Securities and Exchange Commission (SEC) will be deducted from the $1.8bn.

Most of the money will come from founder Steven A Cohen rather than outside investors. Bharara said the fine would not be tax-deductible.

Anyone working at SAC currently will also have to face obstacles to their futures. No one at the firm, even those who co-operated, will have immunity from further prosecution, Bharara said.

SAC Capital
S.A.C. Capital Advisors LLC is the defendant in U.S. vs. S.A.C. Capital Advisors.

Note: Steven A. Cohen is the chairman & CEO for S.A.C. Capital Advisors LLC, and a director at the Robin Hood Foundation.
Foundation to Promote Open Society was a funder for the Robin Hood Foundation.
George Soros is the chairman for the Foundation to Promote Open Society.

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