The U.S. Securities and Exchange Commission’s proposed $616 million insider-trading settlement with hedge fund SAC Capital Advisors LP will be the subject of a March 28 hearing in Manhattan federal court.
U.S. District Judge Victor Marrero in Manhattan, who is presiding over the case, today set a conference on the proposed judgment. On March 15, SAC, the fund run by billionaire Steven A. Cohen, agreed to pay the record sum to settle U.S. regulatory claims that two of its units engaged in insider trading.
The accord stems from allegations that Mathew Martoma, a former CR Intrinsic portfolio manager, illegally obtained confidential information about a clinical trial of an Alzheimer’s drug being developed by Elan Corp. and Wyeth LLC from a doctor who was working on it.
The settlement of the civil allegations against the units doesn’t preclude the SEC from pursuing Cohen himself in the future, George Canellos, the agency’s acting enforcement director, said last week.
The SEC investigation continues, as does the criminal case against Martoma, who has been charged with insider-trading by prosecutors in the office of Manhattan U.S. Attorney Preet Bharara. Martoma has pleaded not guilty and his case is pending.
Cohen was linked in November to alleged illegal trades by Martoma in a case U.S. prosecutors described as the most-lucrative insider-trading scheme ever, with profits and averted losses of $276 million.
SAC and its affiliates settled the SEC’s claims without admitting or denying wrongdoing. SAC unit CR Intrinsic Investors LLC agreed to pay almost $602 million and Sigma Capital will forfeit about $14 million, the SEC said.
The Sigma settlement stems from the case involving Jon Horvath, a former SAC technology analyst who pleaded guilty to passing nonpublic information to his portfolio manager. The SEC alleges that Horvath’s tips earned the fund more than $6.4 million in profits and avoided losses with tips fed to two portfolio managers.
SAC manages $15 billion, 60 percent of which is Cohen’s and his employees’ money. Cohen hasn’t been sued personally by the SEC or charged with a crime.
Jonathan Gasthalter, a spokesman for SAC, declined to comment on the court date.
The criminal case is U.S. v. Martoma, 12-02985, and the civil case is SEC v. CR Intrinsic Investors LLC, 12-08466, U.S. District Court, Southern District of New York (Manhattan).