University News

Trustee’s hedge fund could face new charges

By
Senior Staff Writer
Thursday, November 29, 2012

SAC Capital Advisors L.P., the major Wall Street hedge fund founded and run by Corporation trustee Steven Cohen P’08 P’16, is facing a potential civil-fraud suit brought by federal investigators, various news outlets reported Wednesday. The possible suit comes on the heels of another suit filed last week that marked the fifth allegation of insider trading against employees of the fund in the past few years.

Cohen revealed the latest legal developments in a conference call with SAC Capital investors Wednesday morning, according to the New York Times. The Securities and Exchange Commission has sent SAC Capital a Wells notice, which generally notifies the accused party of impending civil action but not criminal action. A Wells notice indicates that the SEC has gathered the requisite information to file a suit but has not yet done so, Bloomberg Businessweek reported.

During the call, Cohen told investors he had committed no wrongdoing.

The notice comes after Mathew Martoma, a former portfolio manager for an SAC Capital affiliate fund, was charged last week with alleged insider trading that reaped a total of $276 million in profits and averted losses for SAC Capital. The SEC brought civil charges against Martoma, while the U.S. Attorney’s Office for the Southern District of New York brought criminal charges against him. The case is thought to be among the largest insider-trading schemes of all time, investigators said. 

Five other SAC Capital employees have been charged with insider trading in recent years, but these are the most direct charges against the $14 billion hedge fund yet. Some news media outlets have depicted the string of charges as part of an effort to ensnare Cohen, who was implicated for the first time in last week’s allegations but was not charged or explicitly named.

Marisa Quinn, vice president for public affairs and University relations, had not returned multiple requests for comment on the developments as of Wednesday night.