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
theguardian.com, 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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