Hedge-fund billionaire Steven A. Cohen isn’t likely to face criminal charges tied to the biggest alleged insider-trading case in history as U.S. prosecutors conclude there’s not enough evidence to meet a statute of limitations deadline to file a case, the Wall Street Journal reported, citing people familiar with the situation.
The evidence against Cohen, 57, that involves his $15 billion firm SAC Capital Advisors LP isn’t strong enough, the newspaper reported yesterday. It didn’t name its sources.
The case, part of a five-year U.S. crackdown of insider trading at hedge funds, stems from the insider-trading case against former SAC portfolio manager Mathew Martoma, who was charged in November in what prosecutors called the biggest insider-trading scheme in history. SAC paid a record $602 million to settle a civil case related to Martoma’s trades. The five-year statute of limitations deadline for prosecutors to bring charges for Martoma’s 2008 trades expires in late July.
The U.S. says Martoma, who has pleaded not guilty and isn’t cooperating with the U.S., helped SAC reap the illicit profits by trading in shares of Elan Corp. and Wyeth LLC, from tips he received from a physician who was in charge of monitoring tests on a clinical drug trial of bapineuzumab, or bapi, a drug to treat Alzheimer’s disease.
Jonathan Gasthalter, a spokesman for SAC at Sard Verbinnen & Co., declined to comment on the report. Jim Margolin, a spokesman for the FBI in New York, didn’t return a voice-mail message and e-mail message sent after business hours yesterday seeking comment. Martin Klotz, a lawyer for Cohen, didn’t respond to an e-mail seeking comment. Jerika Richardson, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, declined to comment.
The Journal said that prosecutors in Bharara’s office could still go after Cohen for more recent trading activity that won’t be hampered by the five-year statute of limitations for insider trading charges. Criminal charges against Stamford, Connecticut-based SAC also haven’t been ruled out, the Journal said, and prosecutors could use the trades as part of a broader criminal case later against him, the newspaper said, citing people familiar with the probe. The U.S. Securities and Exchange Commission’s investigation of Cohen could lead to a lawsuit against him, according to a person cited by the Wall Street Journal.
Cohen, who has denied any wrongdoing, hasn’t been charged with any crime.
The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).