SAC Capital Advisors LP will plead guilty to securities fraud, CNBC reported, resolving an indictment filed earlier this year in Manhattan federal court that was the culmination of a U.S. insider trading crackdown spanning the past six years.
SAC Capital will be fined $1.8 billion as part of the plea deal, which prosecutors and the hedge fund will probably sign today, the network said citing people familiar with the agreement whom it didn’t name.
The hedge fund founded by Steven A. Cohen and based in Stamford, Connecticut, was indicted in July, accused of operating a conspiracy that stretched as far back as 1999 and reaping hundreds of millions of dollars in illicit profit. Cohen wasn’t charged and the firm had denied any wrongdoing.
The plea agreement reached in the past week between lawyers representing SAC and the U.S. Attorney’s Office in Manhattan won’t include an admission by the hedge fund of promoting insider trading within the firm, CNBC said, citing the people familiar with the deal.
The $1.8 billion fine amounts to about $1.2 billion that would be paid as a result of the criminal probe by Manhattan U.S. Attorney Preet Bharara and includes the more than $600 million that SAC had already agreed to pay the U.S. Securities and Exchange Commission to settle a related suit.
Two of Cohen’s most senior lieutenants to face charges will go on trial in the next three months.
Michael Steinberg, a money manager at SAC, is scheduled to go on trial later this month, accused of trading on inside tips on Dell Inc. and Nvidia Corp. The scheme generated $1.4 million in illicit profits, prosecutors say.
Prosecutors also charged Mathew Martoma, a former SAC money manager, with using illegal tips about an Alzheimer’s drug trial to help the firm make profits or avoid losses totaling $276 million by trading Elan Corp. (ELN) and Wyeth LLC shares. Martoma pleaded not guilty and is scheduled to go to trial in January.
The U.S. called the case the largest insider-trading scheme in history.
Elan Corp. shareholders who sued SAC and Cohen for insider trading asked the judge presiding over the hedge fund’s criminal case to reject any accord SAC has reached with prosecutors unless it pleads guilty to the conduct alleged in their case.
The case is: U.S. v. SAC Capital Advisors LP, 13-CR-00541. U.S. District Court for the Southern District of New York (Manhattan).
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