University News

Trustee’s hedge fund faces criminal charges

SAC Capital, run by Corporation trustee Steven Cohen, was indicted with multiple charges of fraud

By and
University News Editors
Thursday, July 25, 2013

Federal officials announced an indictment Thursday of Corporation trustee Steven A. Cohen’s P’08 P’16 hedge fund SAC Capital Advisors L.P. for multiple counts of fraud.

The indictment did not include any charges against Cohen himself.

Prosecutors allege that multiple divisions and employees of SAC, which managed about $15 billion at the start of the year, were involved in insider trading schemes between 1999 and 2010. The new criminal charges include four counts of securities fraud and one count of wire fraud against the firm, and they cited general “institutional practices” they said created an alleged culture of improper trading.

Mark Nickel, acting director of news and communications, said he did not have immediate information about whether the indictment could affect Cohen’s status as a Corporation trustee and had no immediate comment from the University.

In a follow-up email to The Herald, Vice President for Public Affairs and University Relations Marisa Quinn wrote of Cohen, “His engagement and leadership as a trustee have helped the University advance its mission.”

Chancellor Thomas Tisch ’76, who leads the Corporation, could not be reached for comment Thursday.

SAC employees allegedly traded on non-public information in a scheme that was “on a scale without known precedent in the hedge fund industry,” wrote Preet Bharara, U.S. attorney for the Southern District of New York, in the indictment. Many financial industry analysts believe the charges could accelerate a withdrawal of funds from SAC by its major investors, according to numerous news outlets. And the process could spell the end of the hedge fund.

Though Cohen does not face criminal charges, the Securities and Exchange Commission filed a civil case Friday against Cohen for mismanagement of the firm. The SEC alleges Cohen failed to prevent instances of insider trading by two portfolio managers at SAC. If the civil action succeeds, Cohen would be barred from overseeing SAC investor funds, The Herald previously reported.

Prosecutors have indicted eight current or former SAC employees over the past several years, part of an investigation that has spanned more than a decade and targeted a number of firms, among which SAC was the highest in profile. Bharara also announced Thursday that another of the employees, Richard Lee, had pleaded guilty to insider trading.

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  • $

    Why would it affect Cohen’s status? Steve Rattner gave the family weekend speech in 2012 after being charged in a pay for play scheme by the SEC, and paying huge fines.

    • scumbaglikethem

      Don’t know if it would. But it should. Don’t you agree? Unless, of course, you are a scumbag like them.

  • Daniel Moraff

    Turns out that when you sell off your university’s governance for a quick buck, there is — get this — a downside.