SAC Capital has been in hot water over insider trading allegations, and the firm is said to be in settlement talks with the Department of Justice. However, CNBC’s Kate Kelly now reports that the talks appear to have broken down.

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The firm had agreed to pay a record fine of $616 million in connection with the allegations, but then last week it told its clients that it would no longer cooperate unconditionally with the investigation. Under the proposed settlement deal, SAC Capital was to pay the record fine, and authorities would then agree not to pursue the firm on criminal charges in connection with the alleged insider trading incidents.

But now since the firm is no longer cooperating with regulators, sources have told CNBC that the settlement talks have broken down.

Allegations Against SAC Capital: A History

Regulators are looking into two 2008 trades dealing with pharmaceutical companies, along with a few others. SAC Capital portfolio manager Michael Steinberg was arrested in March by the Federal Bureau of Investigation, and authorities arrested another portfolio manager, Mathew Martoma, late last year.

Several large institutional investors have money invested with SAC Capital. The Blackstone Group L.P. (NYSE:BSX), which is the firm’s largest external investor, has said it intends to redeem at least some of its money before the June deadline offered by SAC Capital. Blackstone has approximately $410 million invested in the firm.

Steven Cohen Subpoenaed

The firm’s well-known chief Steven Cohen has also reportedly been subpoenaed in connection with the allegations, although the firm has neither confirmed nor denied that Cohen has received a subpoena from officials. Other executives at the firm were also said to be named in the subpoena that was reportedly received by Cohen.

Lawyers familiar with the case have said Cohen might claim his right against self-incrimination rather than answer questions before a grand jury. In most cases, a formal indictment follows a grand jury investigation.