Grassley Asks Finra’s Ketchum for SAC Capital Suspicious-Trade Information

U.S. Senator Charles Grassley asked the Financial Industry Regulatory Authority to provide information on the “potential scope of suspicious trading activity” at SAC Capital Advisors LP, the hedge-fund firm founded by billionaire Steven A. Cohen.

Grassley asked Finra Chairman Richard Ketchum for copies of all referrals related to SAC Capital sent to the brokerage regulator since January 2000, according to an April 26 letter obtained by Bloomberg News today. The senator asked Ketchum to respond by May 10.

SAC Capital, which has about $13 billion under management, has come under scrutiny in an insider-trading probe that has ensnared hedge funds, corporate executives and so-called expert networking firms. U.S. prosecutors are investigating accounts at the Stamford, Connecticut-based hedge fund tied to Noah Freeman and Donald Longueuil, former portfolio managers who pleaded guilty to federal insider-trading allegations.

“While SAC Capital itself has not been charged, these allegations raise serious questions about the corporate culture at SAC Capital and undercut investor confidence in a fair and balanced playing field,” said Grassley, the top Republican on the Senate Judiciary Committee.

Jonathan Gasthalter, a spokesman for SAC Capital, didn’t immediately respond to an e-mail seeking comment. He previously said the firm was cooperating with prosecutors and “outraged” at the actions of Freeman and Longueuil. Michelle Ong, a Finra spokeswoman, declined to comment.

Pequot Probe

Grassley’s interest in insider-trading allegations goes back to at least 2006, when as chairman of the Senate Finance Committee, he criticized the Securities and Exchange Commission for allowing top executives to remain insulated from a probe involving Pequot Capital Management Inc.

His interest in that case was fueled by former SEC attorney Gary Aguirre, who said supervisors stymied the investigation. In May 2010, three years after Grassley called on the SEC to reopen the investigation, Pequot and its founder Arthur Samberg agreed to pay almost $28 million to settle SEC claims.

In a May 2009 letter, Samberg told investors he planned to liquidate what was once the world’s largest hedge fund after the insider-trading investigation “cast a cloud” over the firm.

To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net; Jesse Westbrook in London at jwestbrook1@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

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