Corporation Trustee Steven Cohen P’08 P’16 could find a way out of his legal troubles, as he has begun negotiations with federal prosecutors to reach a potential settlement of the charges against his hedge fund and himself, multiple news outlets reported Tuesday.
The talks are still in initial stages. Sources with knowledge of the case told the New York Times that Cohen’s hedge fund, SAC Capital Advisors L.P., could have to pay up to $2 billion and plead guilty to settle.
Prosecutors brought a criminal suit against SAC in July, charging the firm with four counts of securities fraud and one count of wire fraud. Investigators have been examining possible alleged insider trading at SAC for years — eight employees have been implicated in improper trading schemes, and four have pled guilty.
Cohen was personally charged in a civil suit this summer for allegedly “failing to supervise” two of the eight accused SAC employees. Both of those employees will stand trial in the next few months.
If found guilty, Cohen could be banned from the securities industry.
The potential settlement would be expected to encompass both the fund’s criminal charges and Cohen’s civil charges, the Times and Bloomberg Businessweek reported. SAC’s lawyers initially approached New York prosecutors to suggest the possibility of settling, Bloomberg reported.
Though most outside investors have pulled funds from SAC this year, prompting some speculation about the firm’s demise, top Wall Street banks have helped keep it afloat through continued trading and financing. A settlement might provide a route for SAC to stay in business.
If reached, this would not be SAC’s first settlement: The fund paid out $616 million to the government in March to resolve two civil cases against individual employees.
In various statements, Cohen has denied all the charges against him and SAC. In the past, the University has not commented on whether the charges against SAC and Cohen could affect his Corporation membership.
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