SAC to Plead Guilty to Securities Fraud, CNBC Reports

Photographer: Douglas Healey/Bloomberg

Signage for SAC Capital Advisors LP stands at their offices in Stamford, Connecticut. Close

Signage for SAC Capital Advisors LP stands at their offices in Stamford, Connecticut.

Close
Open
Photographer: Douglas Healey/Bloomberg

Signage for SAC Capital Advisors LP stands at their offices in Stamford, Connecticut.

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.

Photographer: Jonathan Fickies/Bloomberg

Michael Steinberg, SAC Capital Advisors LP fund manager, exits federal court in New York on March 29, 2013. Close

Michael Steinberg, SAC Capital Advisors LP fund manager, exits federal court in New... Read More

Close
Open
Photographer: Jonathan Fickies/Bloomberg

Michael Steinberg, SAC Capital Advisors LP fund manager, exits federal court in New York on March 29, 2013.

Jim Margolin, a spokesman for Bharara, declined to comment on the CNBC report. Jonathan Gasthalter, a spokesman for SAC and Cohen, didn’t reply to an e-mail from Bloomberg News seeking comment.

Trials Pending

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.

Photographer: Louis Lanzano/Bloomberg

Mathew Martoma, a former portfolio manager with SAC Capital Advisors LP, right, and his wife Rosemary Martoma exit federal court in New York on June 5, 2013. Close

Mathew Martoma, a former portfolio manager with SAC Capital Advisors LP, right, and his... Read More

Close
Open
Photographer: Louis Lanzano/Bloomberg

Mathew Martoma, a former portfolio manager with SAC Capital Advisors LP, right, and his wife Rosemary Martoma exit federal court in New York on June 5, 2013.

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).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.