SEC charges SAC's Steve Cohen

By Lawrence Delevingne, Rob Copeland

Fri Jul 19, 2013

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SAC: "The SEC's administrative proceeding has no merit. Steve Cohen acted appropriately at all times and will fight this charge vigorously."


   
  Steve Cohen (Photo: Bloomberg)
The Securities and Exchange Commission has filed direct charges against SAC Capital Advisors founder Steve Cohen, a major development in a long-running investigation around insider trading at the well-known hedge fund firm. 

The SEC charged Cohen "for failing to supervise two senior employees and prevent them from insider trading under his watch," according to a press release from the agency. If convicted, Cohen could face "financial penalties, a supervisory and financial services industry bar, and other relief."

"Hedge fund managers are responsible for exercising appropriate supervision over their employees to ensure that their firms comply with the securities laws," said Andrew J. Ceresney, co-director of the SEC's Division of Enforcement. "After learning about red flags indicating potential insider trading by his employees, Steven Cohen allegedly failed to follow up to prevent violations of the law. In addition to the more than $615 million his firm has already agreed to pay for the alleged insider trading, the Enforcement Division is seeking to bar Cohen from overseeing investor funds."

SAC countered with a strong rebuttal. "The SEC's administrative proceeding has no merit. Steve Cohen acted appropriately at all times and will fight this charge vigorously," said SAC spokesperson Jonathan Gasthalter of PR firm Sard Verbinnen & Co. said in a statement. "The SEC ignores SAC's exceptional supervisory structure, its extensive compliance policies and procedures, and Steve Cohen's strong support for SAC's compliance program." 

This year, SAC's flagship global equity fund is up 8.25% through midyear, almost twice the 4.67% median gain for the Absolute Return Global Equity Index. The firm managed $15.04 billion on January 1.

The full SEC filing is below.


SEC Charges SAC's Steve Cohen
by Absolute Return

ISSN: 2151-1845 / CDC10004H