Feds Hit SAC Capital With Criminal, Civil Charges

Feds Hit SAC Capital With Criminal, Civil Charges

SAC Capital Advisors, the hedge fund operated by billionaire Steven A. Cohen, was hit today with white-collar criminal charges that accuse the fund of making hundreds of millions of dollars illegally, and a related government lawsuit said insider trading was pervasive and unprecedented at the firm.

Last Friday, Cohen himself was charged by the Securities and Exchange Commission with a failure to supervise underlings as insider trading allegedly ran rampant at the fund. If found guilty, Cohen may face a lifetime ban from professional financial management. SAC denied those charges in an internal memo Monday.

Today the Feds formally filed criminal charges against SAC Capital and its affiliates (link opens in PDF). The indictment, on charges of four counts of securities fraud and one count of wire fraud, alleges that SAC criminally traded on insider information at the fund for more than a decade. The opening page of the federal grand jury indictment is blunt about the charges, asserting that "an institutional indifference to ... unlawful conduct" at SAC "resulted in insider trading that was substantial, pervasive and on a scale without known precedent in hedge fund history."

Prosecutors allege the crimes were carried out from 1999 through at least 2010. Cohen himself wasn't named as a defendant in the criminal case.

A separate civil case, filed by federal prosecutors on Thursday, seeks to freeze the hedge fund's assets, according to a Reuters report. Back in March, SAC paid a record $616 million to settle insider trading allegations brought by the federal government.

A spokesman for SAC and a lawyer for Cohen did not immediately respond to messages from The Associated Press seeking comment Thursday.

-- Material from The Associated Press was used in this report.


The article Feds Hit SAC Capital With Criminal, Civil Charges originally appeared on Fool.com.

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