The government has asked the Steve Cohen-led hedge fund SAC Capital Advisors to pay $1.8 billion to settle criminal charges, sources familiar with the matter told Kara Scannell of the Financial Times. The deadline to accept the deal is the beginning of November. Otherwise, the government has threatened to demand a larger sum to settle the charges.
SAC Capital tries to clear its mess
SAC Capital has also expressed interest in paying the financial penalty to resolve the criminal charges. SAC Capital lawyers reportedly met representatives of the U.S. Attorney’s office last month. Lawyers representing the hedge fund argued that the penalty was too high. However, the hedge fund is expected to make a counter-offer in coming weeks, sources said.
SAC Capital has already paid a record $600 million to settle civil charges. So, Steven Cohen will still have to pay at least $1.2 billion to the U.S. Attorney’s Office in Manhattan. Both parties have taken steps forward to resolve the issue. The government prosecutors don’t want to drag the process on for longer, because the longer it goes, the more time prosecutors will have to spend preparing for the trial, which costs plenty of money. SAC Capital is desperate to avoid such a trial because as regulators have stated, if the hedge fund is found guilty, they will pursue “any and all” assets of SAC Capital.
SAC Capital: Leaving the history behind
In July, a grand jury charged SAC Capital with securities and wire fraud. The hedge fund was accused of widespread lawbreaking activities. Six of its former employees have pleaded guilty of insider trading. Two others are scheduled to go on trial next month. Steven Cohen has also been charged with failure to supervise his portfolio managers that indulged in insider trading.
SAC Capital has about $14 billion of assets under management. But almost all of its outside investors have sought to withdraw their money from the hedge fund. Steven Cohen has put in about $9 billion of his own money in SAC Capital. The hedge fund rose to fame by delivering excellent returns year after year. SAC Capital has returned an average of about 29 percent annually over the past two decades.