SAC Capital Advisors, the hedge fund managed by billionaire investor Steven A. Cohen, finally settled the insider trading lawsuit filed against it after a federal court approved the $1.2 billion criminal settlement on Thursday.
According to Reuters, Judge Laura Taylor Swain accepted SAC Capital’s guilty plea to the fraud charges during a hearing in the federal court of Manhattan. The criminal settlement includes a $900 million penalty. The hedge fund agreed to pay a total of more than $1.2 billion to settle civil and criminal charges filed against it.
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Motivated by greed
“These crimes clearly were motivated by greed, and these breaches of the public trust require serious penalties. The defendants’ crimes were striking in their magnitude and strikingly indicative of a lack of respect for the law,” said Judge Swain.
On the other hand, U.S. Attorney Preet Bharara in Manhattan stated, “Today marks the day of reckoning for a fund that was riddled with criminal conduct. SAC fostered pervasive insider trading and failed, as a company, to question or prevent it.” He added that the sentence affirms that institutions will pay a heavy price when they flout the law in such a colossal way.
SAC Capital’s settlement details
SAC Capital also agreed to pay a $900 million penalty, which was approved by a different judge to settle a related civil forfeiture case in November last year. Today’s $900 million fine comes on top of the earlier judgment.
The hedge fund received a credit for its earlier $616 million insider trading settlement with the Securities and Exchange Commission (SEC). As a result, SAC Capital was required to pay an additional $1.2 billion criminal settlement.
That judgment gave SAC Capital credit for $616 million in earlier insider trading settlements with the U.S. Securities and Exchange Commission, resulting in SAC Capital paying an additional $1.2 billion as part of the criminal accord.
The hedge fund agreed to employ former prosecutor Bart Schwartz as compliance consultant. SAC Capital will be under probation for five years.
On Monday, SAC Capital transformed itself into a family office and change its name to Point72 Asset Management, which will primarily manage Cohen’s personal funds. Forbes magazine estimated that Cohen’s fortune is around $11.1 billion.