Though billionaire Steven A. Cohen seems perpetually cushioned from direct charges, his hedge funds, operated at SAC Capital Advisors, continue to be fraught with charges, the latest made on Thursday, which claim the firm made millions illegally. The charges, placed in a federal court in Manhattan, recount alleged criminal activity, a “pervasive and unprecedented” amount of inside trading at the firm. Such activity has been going on from 1999 to 2010, and four have already been charged with insider trading. Two of those charged have plead guilty to the charges.
As the Associated Press reported, the criminal charges said SAC’s “relentless pursuit of an information ‘edge’ fostered a business culture within SAC in which there was no meaningful commitment to ensure that such ‘edge’ came from legitimate research and not inside information.”
It continued that: “The predictable and foreseeable result, as charged herein, was systematic insider trading by the SAC entity defendants resulting in hundreds of millions of dollars of illegal profits and avoided losses at the expense of members of the investing public.”
The indictment said that SAC’s portfolio managers and research analysts “engaged in a pattern of obtaining insider information from dozens of publicly-traded companies across multiple industry sectors.”
Whether this manages to nab head honcho Cohen, who is one of the few hedge fund managers able to pull in $1 billion a year, that remains to be seen. Shielded by money, he may have bought immunity. Nevertheless, the SEC alleges that Cohen received “highly suspicious information that should have caused any reasonable hedge fund manager in Cohen’s position to take prompt action to determine whether employees under his supervision were engaged in unlawful conduct and to prevent violations of the federal securities laws.”
In charges against Mathew Martoma, who is accused of earning $9 million in bonuses for insider trading on an Alzheimer trial, it is believed that Cohen is the “Hedge Fund Owner” referenced in the complaint. They describe how said owner rejects his own analysts and followed Martoma’s secret tips, and when the Alzheimer’s trials went poorly, advised his top trader to dump stock, “and to do so in a way to not alert anyone else.”
Whether the SAC will ultimately collapse from the charges is a possibility the justice department is wary of.