From bloomberg:
Billionaire Steven A. Cohen's SAC Capital Advisors LP, the hedge fund accused of fostering a culture of rampant insider trading, has agreed to plead guilty to securities fraud and wire fraud, pay a record $1.8 billion and shutter its investment advisory business.The company, indicted earlier this year, was accused of operating a conspiracy stretching back to 1999, reaping hundreds of millions of dollars in illicit profit. Cohen, 57, wasn’t charged in the indictment of the Stamford, Connecticut-based firm. He still faces an administrative action filed by the U.S. Securities and Exchange Commission for his alleged failure to supervise the hedge fund’s activities.
Jonathan Gasthalter, a spokesman for SAC, said in an e-mailed statement that the hedge fund takes “responsibility for the handful of men who pleaded guilty and whose conduct gave rise to SAC’s liability. The tiny fraction of wrongdoers does not represent the 3,000 honest men and women who have worked at the firm during the past 21 years.”Gasthalter said that SAC has never “encouraged, promoted or tolerated insider trading.”
The plea deal isn’t the end of the U.S. investigation of SAC or Cohen, who has been the target of the multiyear probe. Two insider-trading trials in the next three months of managers at his hedge fund may shed more light on its internal workings, and prosecutors continue to investigate trading by SAC employees in Gymboree Corp., a children’s-apparel maker, a person familiar with the matter said.
The SAC agreement provides “no immunity from prosecution for any individual and does not restrict the government from charging any individual for any criminal offense,” the government wrote in the court filing.
...
“You would think that SAC would agree only to a global resolution that would put this whole thing to bed, and would also include a resolution to a criminal investigation of Steve Cohen,” said Stephen Miller, a former federal prosecutor, now a partner at Cozen O’Connor in Philadelphia. “The government would have a good reason why it doesn’t and it could mean further charges may very well be coming down the pike.”
http://www.bloomberg.com/news/2013-11-04/SAC-agrees-to-plead-guilty-to-…
Most of the investors have already pulled out the money, so SAC will continue operating like a family office. Looks like they are shutting down their London office and have close 6 PM teams.
The guilty plea is huge, and comes with no immunity from further prosecution. Brutal. These guys won't quit till Stevie's wearing stripes.
i do not think it will be bon voyage as stevie still has 6b in personal money to run.
Jon Corzine steals hundres of millions of dollars, is free.
Steve Cohen makes hundres of millions for investors on insider trading, is getting hung by the balls
Fuck the SEC
@Bondarb They're like a dog with a bone, bro. They're not letting him go. Read my post later today. They're going after him for Gymboree now. They won't quit until he's gone (or behind bars).
What if they take his art?
Managing my own money north of 1bn would be a dream come true.
Agreed. At some point stock-picking, especially when everyone seems to think you did so unethically, has to get old.
Well, I was thinking of something more along the lines of a family office.
Just found these videos: http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-cris…-trading-rules/?utm_campaign=business-economy-financial-crisis&utm_source=newsletter&elq=7fccda8211fc44f195b0dbc6c4fd38dd&elqCampaignId=737
I don't get the point of settling if it doesn't end here. It's surprising his legal team let this happen. There is more to the story, because even a mediocre lawyer wouldn't let you settle given the information presented.
^they settled with SAC the entity. It was a forgone conclusion that SAC as an entity was guilty. thus the settlement
But, they don't have any other levers to pull? That seems unlikely.
^ very cool, thanks for sharing
Looks like Stevie is having the last laugh
http://dealbook.nytimes.com/2014/10/16/new-name-new-office-similar-perf…
Once a winner, always a winner. Cohen is a BOSS.
I would kill to work at Point72.
Then get on it, they're hiring analysts like crazy right now.
Cohen is a total baller. 2 Bil ain't no thing. Just set his networth back by a year.
Ex-SAC Capital Manager Claims the Fund Trades on Inside Information (Originally Posted: 10/02/2012)
According to a Bloomberg News report, a former portfolio manager at SAC Capital told the FBI that it was understood that inside information was used in crafting trade ideas for Steven A. Cohen, SAC's founder and manager.
The portfolio manager in question is Noah Freeman, In February 2011, he pleaded guilty to securities fraud after speaking to FBI agents and Federal prosecutors in New York in a proffer session. Per Bloomberg:
What's particularly interesting about Freeman's statements are that it appears as though many of SAC's fund managers were expected to share their best ideas directly with Steven Cohen for the specific purposes of trading in the "Cohen Account."
Per Bloomberg:
I highly recommend everyone reads the article in its entirety because it paints a pretty ugly picture of insider trading at big time hedge funds.
The more and more I read about this sort of thing, the more I wonder: how prevalent is insider trading in the hedge fund industry? Is it just a few dirty players giving everyone a bad name or is the industry filled with people trying to cut corners?
To an extent, I can understand how one would be driven to trade on inside information. Think for a moment about how many hedge funds there are. Obviously, on a site like WSO, the focus is on the big names - SAC, Greenlight, Bridgewater - but there are hundreds, if not thousands, of smaller and lesser known funds out there. And the universe of good trading ideas continues to shrink as more and more money chases after them. Very few funds are capable of generating research and ideas on par with places like Greenlight, so you have to imagine that less capable funds look for an edge in other ways.
Furthermore, when you've got capital, you typically also have access to different resources than the average investor. Not simply access to company management teams, but access to investigative due diligence companies and so-called "expert networks" (i.e. Gerson Lehrman Group). The level of access that you have to information is remarkable, and it doesn't take a giant mental leap to assume that you'll find yourself capable of digging up non-public material data that you can trade on if you seek it out.
My question for WSO is, do you think this sort of behavior is common in the hedge fund community? Does anyone have any first-or-second hand knowledge of these sorts of activities?
I'd also love to hear from people who are currently at hedge funds. How frequently do you come across third parties whose duty it seems is to dig up insider info? Do you find it frustrating to compete cleanly while other funds are doing anything they can to get an edge?
Is your tag implying Cohen looks like George Costanza? I agree.
I'm willing to bet Greenlight Capital has never traded on inside info, but I'm sure SAC isn't alone.
I found this article interesting from Dec, 2011. http://www.reuters.com/article/2011/12/13/us-sac-cohen-deposition-idUST…
[quote=BTbanker]Is your tag implying Cohen looks like George Costanza? I agree.
I'm willing to bet Greenlight Capital has never traded on inside info, but I'm sure SAC isn't alone.
I found this article interesting from Dec, 2011. http://www.reuters.com/article/2011/12/13/us-sac-cohen-deposition-idUST…]
On the tag, oh yeah. He reminds me so much of George, I can't get over it.
Thanks for the article link as well.
Eh, insider trading... what would that account for, like, a couple cents extra in share price MAYBE a couple of days/weeks/months in advance of an event, as opposed to a change in the share price of say 100 times that when the event occurs? Not a significant thing in the big picture. Probably happens relatively little given that 60-70% of all HF's dont beat the market in any given year.
I mean, it really depends on how big the news is, right? If you knew about a merger ahead of time, wouldn't you be able to make bank? Blue Horseshoe loves Bluestar Airlines, right?
And, even if a fund doesn't generate alpha for a given period, that doesn't excuse any insider trading. If anything, it would make me think that they're incompetent and shouldn't be in the money managing business to begin with.
I agree with this, and would go even further to say that with all this macro stuff going on in the EU, any prior knowledge regarding a firm-specific event (earnings beat, etc) would almost be irrelevant. All it would take is some inane "German Chancellor gives the bird to Greek plebes in 30th Pointless Brussels Summit" headline to wipe out an earnings beat or buyback announcement.
On the other hand, you have your Rajat Gupta's getting tipped by Goldman board members literally minutes after a secret meeting about Buffett buying $5 Bill of stock. Correct me if I'm wrong, but I'm pretty sure he made close to $60 million buy noon the next day trading on that little gem.
I wonder if Stevie can get hit by any of this. By trading on insider information that you didn't know was insider information, can you be fined?
I really don't care about insider trading outside of the executives of companies they work for. If a CEO knows that the company is gonna tank and does all he can to get his and GTFO rather than fix it- that's criminal. I really don't care if someone overheard that Apple missed sales targets at a bar makes some money (even if the listener is George Soros and he makes more than the CEO would have made)
I mostly agree with you. If anything, it might make sense to have a sliding scale of insider trading such that scummy management teams that dump their stock to cash out prior to shit hitting the fan get the most severe punishments while guys that make a few bucks trading on some hearsay they heard at the bar don't get anything (at most a slap on the wrist in the form of a tiny fine.)
Not all insider trading is created equal. Though, it's certainly true that certain players will have much greater opportunities to partake in it than others (i.e. hedge fund vs. joe schmo with his fidelity account.)
how prevalent is insider trading in the hedge fund industry?
There was a famous policy paper done a while ago (have to look for it), the author basically analyzed the behavior of prices in different markets before an expected price-changing piece of news comes out to the public with sophisticated stat techniques. For the US equity market, it suggested that insider trading was not at all uncommon.
As for SAC- didn't they have 3-4 high profile media stories about insider trading these last 3 years? Reporters don't always hear about formal SEC investigations and the SEC only investigates when they REALLY think they might be able to find evidence - not just when they think it's true. For a HF to have a formal investigation much less more than 1, suggests to me that insider trading is highly likely.
Of course it goes without saying that non-public info that isn't material is completely legal, like street legal.
It also goes without saying that the difference between material and non-material can often be just a smidge.
I bet some people like to just mix it all up into a mosaic, almost like a fruit smoothie, and hope for the best.
the term insider trading is soooo overused. i agree that there does need to be consequences in some form. but even the SEC is the ultimate insider and punishes "insider trading" on an extremely subjective level. such bullshit. i would say i can't stand it, but then i claim to to be a pragmatic, realistic person, working within the current system to take advantage of it wherever possible, treading carefully with the powers that be. well, at least that's what i would like to do if I were a PM with insider knowledge. So I am completely on the outside, but my suspicion is that it's more a "you just have to be really careful with the timing of your trades when you have insider information". yah whatever it sounds unethical. but what is the reality? Those with the best information make the most money. And anyone who tells you the best information doesn't include some level of inside information in my opinion is a jackwad nincompoot. well there's my two cents coming from a senior finance major at a non-target.
http://dealbreaker.com/2012/10/noah-freeman-can-consider-his-invitation…
i see the hedge funds and doping athletes in the same vein. If there's big money to be made, there's value in cheating. SOME will cheat, and those that do cheat will do very well. So unless you're superhuman, to compete with them you need to cheat too.
Look back at the top performers a decade ago. Ponzi or insiders, and those were the ones they've caught.
SAC Capital Gave out a Bribe (Originally Posted: 12/11/2012)
Has anyone heard a rumor concerning SAC Capital and a bribe made to a former trader specializing in energy/utility stocks? I've heard from two seperate sources that Steve Cohen has OK'd a bribe "appreciation bonus" to a FORMER employee somewhere in the seven figures "millions of dollars". Persumably to guard against publicity of illegal activities "trade secrets". How it came about (blackmail?) I don't know. Though the only thing guarding against it is fear of related criminal charges against the blackmailer. On the other hand whistleblower awards from the SEC is still a possibility. Seems that once appreciation bonuses have to be paid, SAC is on its last legs legally speaking.
If the trader cooperates with the SEC, he'll receive money, but he'll also go to jail and will never work in the industry again. Kind of a no-brainer here.
Maybe has something to do with this Wells Notice?
http://www.sfgate.com/business/bloomberg/article/SAC-Scrutiny-Intensifi…
SAC/Cohen won't be "brought to justice". Some elephants are just too big to bag.
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