SAC Compliance Head Quits After Insider Cases Hit Firm
SAC Capital Advisors LP, the hedge-fund manager that U.S. prosecutors have called a “veritable magnet for market cheaters,” said Chief Compliance Officer Steve Kessler is stepping down at the end of the month after nine years at the firm.
John Casey, the compliance department’s chief operating officer, will be interim head of the unit, according to an employee memo obtained yesterday by Bloomberg News.
The U.S. said in July that the firm’s compliance unit had identified only one example of suspected insider trading in its history. SAC, run by billionaire Steven A. Cohen, agreed in November to pay a record $1.8 billion to settle insider-trading charges. Six former employees have pleaded guilty to insider trading, and another two money managers, Mathew Martoma and Michael Steinberg, were found guilty of securities fraud.
Cohen, 57, who hasn’t been charged with a crime, faces an administrative proceeding before the U.S. Securities and Exchange Commission over whether he failed to properly supervise trading at his firm.
Jonathan Gasthalter, a spokesman for the Stamford, Connecticut firm at Sard Verbinnen & Co., declined to comment on the departure.
Kessler plans to spend more time with his family and philanthropy, and will be an adviser to SAC, according to the memo.
“He was instrumental in creating the firm’s compliance technology group, brought a series of state of the art surveillance technologies on line and has been a leading advocate to regulators on behalf of the industry,” SAC said in the memo.
Kessler was among five SAC employees who received subpoenas in May to appear before a grand jury, people said at the time. The firm said that month that it was strengthening its compliance program by adding more employees to help perform functions such as monitoring instant messages and other communications.
Cohen will rename the firm and add a layer of management to oversee traders as he turns SAC into a firm that mainly manages his and his employees’ money, a person familiar with the firm said earlier this month. SAC, which will manage about $9 billion, plans to have three trading units after the restructuring, said the person.
Casey joined SAC in 2005 and then left to serve as the CCO at the Rohatyn Group in 2010. He returned in 2012. He had previously worked at New York Life Investment Management and Deutsche Bank AG.
As part of its agreement with the U.S., SAC will name an independent compliance consultant who will be approved by the government, according to prosecutors.
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