SAC Capital Advisors LP, the hedge fund managed by Steven A. Cohen, is expected to plead guilty to securities fraud to settle the insider trading complaint filed by U.S. authorities, according to a report from The Wall Street Journal, based on information from sources with knowledge about the situation.
The details of the settlement with SAC Capital
The report indicated that federal prosecutors are scheduled to announce the details of the settlement with SAC Capital Advisors LP next week. According to sources, the exact date of the deal was not yet determined, nor have the final details of the settlement been revealed, although it is possible that authorities may reveal the settlement by the end of the week.
Sources said that Cohen will agree to payment of an approximately $1.2 billion penalty and to stop managing outside investments as part of the settlement. In addition, SAC Capital Advisors LP agreed to pay $616 million to settle the insider-trading complaint filed by the Securities and Exchange Commission (SAC) last March. Overall, Cohen and his firm will pay about $1.8 billion, the largest insider trading penalty ever recorded.
Cohen considered the idea of closing SAC Capital
Last May, Cohen considered the idea of closing SAC Capital and opening a family office to manage his personal funds. The hedge fund manager has $9 billion investments in his hedge fund, which means he will still manage a large portfolio without outside investors.
According to people familiar with situation, a separate negotiation is ongoing regarding a civil complaint by the SEC seeking to prohibit Cohen from managing outside investments. The hedge fund previously stated that the civil suit has “no merit” and Cohen did not commit wrongdoing.
Spokespersons for the U.S. Attorney General in Manhattan and the Federal Bureau of Investigation (FBI) refused to comment regarding the report.
Meanwhile, during an interview with CNBC yesterday, Anthony Scaramucci, co-managing partner of Skybridge Capital, commented that the Department of Justice (DOJ) and SEC have “gone crazy” on the insider-trading case against Cohen and his hedge fund.
“I think it’s sad for the people who have their money managed by (Steven Cohen). He’s had great performance this year, You guys know how I feel about him personally. I hope that this is the cycle of the witch-hunting ending for the Department of Justice and the SEC. Look at JPMorgan Chase & Co. (NYSE:JPM). Not just SAC/Cohen. They’re after everybody. I think it’s unfair. I’m one of the few people who’s bold enough to speak out about it,” said Scaramucci,