Hedge fund titan Steven A. Cohen’s firm, long the focus of a federal investigation into insider trading, is paying more than $600 million to US securities regulators to settle allegations arising from improper trading in two stocks.
The settlement with the US Securities and Exchange Commission (SEC) announced on Friday is one of the largest ever by a hedge fund and involves allegations of improper trading by two subsidiaries of Cohen’s $15 billion SAC Capital Advisors.
SAC Capital affiliate CR Intrinsic agreed to pay more than $600 million to settle allegations that one of its former employees participated in an insider trading scheme involving shares of Elan Corp. and Wyeth Inc., now a part of Pfizer Inc.
In another settlement, SAC Capital subsidiary Sigma Capital agreed to pay $14 million to settle charges the firm engaged in insider trading in shares of Dell and Nvidia Corp.
The settlements come after outside investors in Cohen’s fund submitted notices last month to pull $1.68 billion from SAC Capital, largely over concern about the insider trading investigation. Cohen is one of the $2 trillion hedge fund industry’s best known and most successful traders.
The fines will be paid by SAC Capital’s management company and not outside investors, said a person familiar with SAC Capital.
In a statement, the firm said, “This settlement is a substantial step toward resolving all outstanding regulatory matters and allows the firm to move forward with confidence.”
In November, regulators charged CR Intrinsic with insider trading in November when the SEC said one of its portfolio managers, Mathew Martoma, illegally obtained confidential details about a clinical trial for an Alzheimer’s drug.
Martoma is facing criminal charges over the incident and has pleaded not guilty.
Neither SAC Capital nor any of it subsidiaries admitted or denied wrongdoing in agreeing to the settlements.
Cohen, one of the industry’s most successful traders, has not been charged with any wrongdoing by authorities. Reuters