SEC Prepares A Civil Fraud Case Against SAC Capital

SAC Capital Advisors, the $20 billion plus hedge fund managed by billionaire Steven Cohen, said in a conference call Wednesday with investors that the Securities and Exchange Commission is preparing a civil fraud case against the firm for its alleged role in an insider trading case. SAC management told clients that they would be responsible for any costs or penalties, according to CNBC.

SEC Prepares A Civil Fraud Case Against SAC Capital

SAC also told investors that it has received a Wells Notice from the Securities and Exchange Commission, which indicates that the federal regulators are considering an enforcement action against the hedge fund.

This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery

D1 CapitalThe first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More

Last week, a former portfolio manager at SAC Capital, Mathew Martoma was accused by federal prosecutors of obtaining confidential data for an Alzheimer’s drug clinical trial by bribing a neurology professor working on it. This secret information allegedly helped SAC make millions and avoid $276 million in losses. In the past three years, the government has charged six SAC employees with criminal insider trading allegations, but it’s the first time the questionable trades have been connected directly to the “owner” of SAC Capital: Steven Cohen. SEC has already filed a civil case against Mr. Martoma.

During the conference call, SAC president Tom Conheeney reiterated that the hedge fund and Mr. Cohen are confident that they have always acted as per the regulations, and they will continue to cooperate with the regulators. Many SAC investors also defended the firm, saying that it is extremely difficult for a large organization to monitor each employee’s actions.

The Wells Notice from SEC doesn’t mean that Justice Department would file a criminal case against SAC or Mr. Cohen. But it is the strongest shot by regulators on SAC Capital so far. Steven Cohen has been in prosecutors’ sights for the past seven years.

SAC Capital was started by Steven Cohen in 1992 with $20 million of his own money. Over the last two decades, Cohen has gained the reputation of one of the most successful traders in the Wall Street. The hedge fund has more than 900 employees around the world.