SAC has told its clients that its cooperation with United States Regulators is no longer unconditional. The investment firm has been in trouble in recent weeks as it fights various lawsuits resulting from insider trading allegations. The move puts more pressure on regulators as they try to clean up the various accusations held against the company.
The firm said that there would be “substantially more clarity” through 2013 about the investigation. The company made the statement in a letter it sent to its clients on Friday. The company expects disclosure to clients to be limited because of confidentiality agreements with regulators, according to a Bloomberg piece on the news.
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SAC Capital Agreed To Pay Fine
Last month, SAC Capital agreed to pay a fine of $616 million in response to the regulatory suit, but the company was not being forced to deny or admit guilt in the case. With the firm refusing to cooperate fully with the United States any more, it seems as though that settlement may not be finalized.
Last November a former SAC portfolio manager was charged with insider trading by the SEC. Back then, the case was described as the most lucrative insider trading case of all time. The case dealt with Mathew Martoma and a trade that netted SAC more than $250 million, in gains made or losses avoided, on a pharmaceuticals trade.
In July of 2008, SAC Capital made trades, which according to prosecutors were pushed by insider information, on a drug trial that came out of pharmaceutical companies Wyeth and Elan Corporation, plc (NYSE:ELN). The trial dealt with an Alzheimer drug, and the negative results from the trial were preceded by massive SAC capital trades.
Earlier this week, Elan plc (NYSE:ELN) shareholders said that they would sue the investment firm for the gains it made in trading on that deal. That law suit sought a total of one billion in ill-gotten gains plus interest that Elan shareholders felt was rightly owed them by Stephen Cohen’s firm.
Early on in May, SAC Capital revealed that it was bringing in a new compliance policy that would “deter conduct that would threaten the integrity of the firm.” The new compliance rules were judged by the Wall Street Journal to be a way for the company to earn back the confidence of investors, who were shaken by the insider trading lawsuit.
UPDATE 4:52PM EST: A prior version of this article had the title ‘SAC No Longer Cooperating With Insider Trading Investigation’. The current version has been updated with a more accurate title ‘SAC No Longer Cooperating Unconditionally With Insider Trading Investigation’