The United States Circuit Court of Appeals reinstated a lawsuit against Steven Cohen, founder and manager of SAC Capital Advisors in connection with the previous complaint of his former spouse that he concealed some of his assets during their divorce in 1990.

Steve Cohen

In 2011, a federal judge in the District Court of Manhattan dismissed Patricia Cohen’s lawsuit against the hedge fund manager. The federal judge rules that the lawsuit was unsubstantiated to move forward because her fraud allegations were too old.

The legal counsels of the hedge fund manager believed that Patricia filed the fraud complaint against Steven in order to “harass and generate media attention” after 20 years since the couples’ divorce. When Patricia filed the lawsuit, Cohen’s career as hedge fund manager is becoming fruitful and he becoming of the richest person in the United States.

The U.S. Circuit of Appeals has a different opinion on the case. On Wednesday,  presiding judge in the case ruled that there was no basis to dismiss Patricia’s fraud claims as untimely because of the fact that she only discovered evidence to support his allegations against Steven in 2008.
According to the court, “Until that point, “Patricia’s suspicions that Steven had concealed payments due him … were based on nothing more than intuition and wishful thinking.”

Patricia filed a lawsuit against Steven after discovering in a court filing that Steven received a $5.5 million settlement from a partner in connection a dispute on his co-op investment. She claimed that Steven reduced his net worth to $8.1 million at the time when the couples were contesting about their financial agreement in 1991. Steven claimed that he lost all his $9 million investments in co-op apartments.

In her lawsuit, Patricia also claimed that Steven gained $20 million after receiving an information from his fellow graduates at the Wharton School at the University of Pennsylvania that General Electric (NYSE:GE) was planning to buy RCA in 1985. The complaint referred to the group of tipsters as “the Wharton mafia.”

Commenting on the ruling of the Circuit Court of Appeals, Howard Foster, the lawyer for Patricia said they were delighted and his client was very eager to resume the legal battle.

On the other hand, Jonathan Gasthalter, spokesperson for the hedge fund manager said, “As we have said from the outset, these decades-old allegations by Mr. Cohen’s former spouse were patently false and entirely without merit. We will continue to defend against them vigorously.”

The decision of the court came after SAC Capital Advisors agreed to pay a penalty of $616 million to settle two insider trading allegations from the Securities and Exchange Commission (SEC). The FBI arrested on Friday, the firm’s long-time portfolio manager, Michael Steinberg as federal authorities deepen their investigation against the criminal insider-trading activities of the hedge fund.