SAC Retains Palantir to Boost Surveillance After Charges
SAC Capital Advisors LP, the hedge-fund firm that agreed to pay a record fine to settle insider-trading charges, moved to boost surveillance by hiring Palantir Technologies Inc., a Central Intelligence Agency-backed software maker.
“We have asked ourselves if there are ways to better detect improper activity and to create a clearer picture of the different types and sources of information that enter the firm,” SAC President Thomas Conheeney said in a memo to employees yesterday.
SAC in November plead guilty to securities fraud and agreed to pay $1.8 billion to settle U.S. allegations of insider trading. As part of the settlement, billionaire founder Steven A. Cohen, 57, consented to closing his firm to outside investors and returning client money. Eight former employees have pleaded guilty or been convicted of using confidential and material information to profit, while two have settled with federal regulators without admitting or denying wrongdoing.
SAC hired Palantir after inviting the Palo Alto, California-based company nine months ago to embed a team within its compliance and technology group, Conheeney said in the memo.
Peter Thiel, the venture capitalist and early Facebook Inc. investor, in 2004 co-founded Palantir, which counts In-Q-Tel, the venture arm of the CIA, among its investors.
“Palantir’s analytics give us a powerful new tool for our compliance and surveillance team and we have also found promising uses for our due diligence and hiring teams,” Conheeney wrote. “This innovative approach will further help protect us from information and people that could potentially taint the firm.”
Jonathan Gasthalter, a spokesman for Stamford, Connecticut-based SAC at Sard Verbinnen & Co., declined to comment on the hiring of Palantir.
SAC will change its name next month to Point72 Asset Management as it transitions to a firm that manages Cohen’s wealth, which is estimated at $8.7 billion, according to the Bloomberg Billionaires Index.
SAC said last month that Chief Compliance Officer Steve Kessler would be stepping down. Prosecutors said last July that the firm’s compliance unit had identified only one example of suspected insider trading in its history.
As part of its accord with the U.S., SAC was set to name an independent compliance consultant who will be approved by the government, according to prosecutors.
The firm said last May that it was strengthening its compliance program by adding more employees to help perform functions such as monitoring instant messages and other communications.
To contact the editors responsible for this story: Christian Baumgaertel at firstname.lastname@example.org Josh Friedman, Daniel Taub