Insider Trading Testimony Given by SAC’s Cohen To SEC

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SAC Capital’s  Steven Cohen gave his testimony to the Securities and Exchange Commission, but he didn’t shed much light on the allegations of insider trading against one of his former managers.

Insider Trading Testimony Given by SAC's Cohen To SEC

The Financial Times cites an anonymous source who is familiar with Cohen’s testimony.  The person reportedly said Cohen’s memory was “vague” and that “he could recall few details” about the 2008 phone conversation he had with his portfolio manager on the day he was told to trade the stock. But Cohen did tell the SEC that one of his managers told him to trade shares of  ELAN CORP (PINK:ELNCF) and Wyeth Limited (NSE:WYETH) because he was “no longer comfortable” with the position SAC Capital held on the stock.

Former SAC portfolio manager, Mathew Martoma faces charges of insider trading after he apparently advised Cohen to sell those shares just days before an announcement about negative results from a drug trial ELAN CORP (PINK:ELNCF) and Wyeth Limited (NSE:WYETH) was conducting. That trade earned SAC $81 million and prevented $194 million in losses. Martoma was arrested last week on allegations related to that trade, and charged with fraud.

The case will largely hinge on the conversation Steve Cohen and Martoma had the day Martoma told Cohen to trade the Elan and Wyeth shares. The details of that conversation are important, because this is the first time federal investigators have been able to link Cohen directly to allegations of insider trading. At this point Cohen has not been charged with anything.

Cohen’s embattled hedge fund has repeatedly faced insider trading accusations over the years, although no civil charges have been filed against it. But that could change now, as SAC received a notice from the SEC earlier this week stating that it could face civil charges in connect with the case against Martoma.

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