Steven L Kessler, chief compliance officer at SAC Capital, is laying down office at the scandal-ridden hedge fund after nine years on the job.
SAC is currently in the process of converting to a family office, having closed its doors to outside money. The restructuring of the firm came after it pleaded guilty to insider trading last year and agreed to pay $1.8B to settle the charges. Nine of SAC’s employees were found or pleaded guilty in the insider trading investigations. However, according to the U.S., the firm’s internal compliance watchdog had been able to identify only one suspected insider trading episode in its history.
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SAC’s raft of defections
Last week, a federal jury in Manhattan found Mathew Martoma, a former portfolio manager at SAC, guilty of insider trading in the shares of Elan Corporation, plc (NYSE:ELN) and Wyeth Limited (BOM:500095) (NSE:WYETH). He is likely to serve 10 years in prison.
Meanwhile, billionaire Steve Cohen, who controls SAC, is likely to get away with merely an administrative rap on the knuckles from the SEC for allegedly failing to adequately supervise the employees related to the insider trading scandal.
The investigations perhaps led to a stream of defections by SAC personnel to other organizations in the industry. Talented executives such as Massimo Amati, Stanislas de Caumont and Robert Harris moved off to Balyasny Asset Management. SAC portfolio managers Nicholas Aldridge, Israa Al Bayaa, Arjun Menon, Alexi Papaconstantinou, Bramen Singanayagam, Martin Stapleton and Louis Villa and analysts Atallah Estephan and Rahil Kuchiera were hired away by Moore Capital, one of the largest hedge funds in the world.
Where does SEC go from here?
However, an employee memo obtained by Bloomberg said Kessler will hereafter engage in philanthropy, act as an advisor to SAC and devote more time to family. Kessler’s place at SAC will be taken over in the interim by John Casey, currently the COO of the compliance department.
SAC has also undertaken to appoint an independent compliance consultant subject to approval by the government.