SAC Capital Advisors LP, the hedge-fund firm that’s facing federal insider-trading charges and a money-laundering lawsuit, is raising 2014 bonuses for its portfolio managers by 3.5 percentage points to help retain employees, a person with knowledge of the decision.
The increase, announced to employees in meetings today, will be paid to equity, macroeconomic and quantitative-trading portfolio managers, said the person, who asked not to be identified because the discussions are private. SAC portfolio managers are typically paid an annual bonus of 15 percent to 25 percent of the profits they generate from their investments.
SAC founder Steven A. Cohen last month sought to reassure employees that business will continue as usual after U.S. prosecutors indicted the 21-year-old firm and raised the prospect that its assets may be subject to forfeiture. Many of SAC’s employees have contacted friends, hedge funds and recruiters in a bid to land jobs next year when they expect the firm will need far fewer employees, people who have spoken to them said last month.
SAC told employees today that it will guarantee a minimum compensation of $300,000 for its equity analysts for next year, the person said. A spokesman for the Stamford, Connecticut-based firm declined to comment.
Cohen had raised bonuses for this year as the government’s insider-trading probe intensified following the November arrest of former portfolio manager Mathew Martoma. Equity, macro and commodity portfolio managers received an increase of 3 percentage points, a person with knowledge of the plan said in January.
SAC has about 1,000 employees working out of offices from New York to Hong Kong. While the firm doesn’t disclose portfolio managers’ pay, it said in a July 22 report that “numerous” portfolio managers have earned more than the $9.3 million bonus made in 2008 by Martoma.
SAC was accused by the U.S. in a July 25 indictment of engaging in an unprecedented insider-trading scheme lasting more than a decade. The same month, regulators in an administrative action said Cohen failed to supervise Martoma and another portfolio manager.
The firm was granted court approval to continue operating until the cases are resolved.
Clients have pulled their money as the government investigation progressed. Executives at SAC, which oversaw about $15 billion in assets at the start of the year, expect to begin 2014 with about $9 billion.