SAC Capital Timeline: Insider Scheme Started in 1999

SAC Capital Advisors LP, the $14 billion hedge fund founded by Steven A. Cohen, was a “veritable magnet for market cheaters,” Manhattan U.S. Attorney Preet Bharara said yesterday after indicting the firm on four counts of securities fraud and one count of wire fraud.

The scheme, which involved more than 20 companies and went back as far as 1999, helped reap hundreds of millions of dollars in illicit profits, the U.S. said. Cohen founded the Stamford, Connecticut-based firm in 1992. The U.S. described separate insider trading schemes by at least eight former SAC fund managers and analysts. Cohen hasn’t been charged. Here is a timeline of the case:

July 23: Richard Lee, a former SAC portfolio manager who worked at the firm until March 2013, secretly pleaded guilty to insider trading charges, two days before Bharara announced the indictment of SAC. His lawyer said he’s cooperating with the U.S.

July 19: The SEC accused Cohen of failing to supervise former health-care portfolio manager Mathew Martoma and Michael Steinberg, a technology fund manager at SAC’s Sigma Capital Management unit. The SEC said Cohen received “highly suspicious” information that should have caused any reasonable hedge-fund manager to investigate the basis for trades made by the two managers. While the agency stopped short of accusing Cohen of insider trading, regulators alleged that in late August 2008, Cohen traded on nonpublic information on Dell Inc., selling off his entire position, more than $11 million, minutes after receiving an advance tip from former SAC analyst, Jon Horvath, that the computer maker would announce disappointing quarterly earnings.

March 29: Steinberg was charged with earning more than $1.4 million based on illicit tips provided by Horvath. Steinberg, who has pleaded not guilty, is the longest-serving SAC employee to be charged in the probe. He is scheduled to go to trial Nov. 18 in Manhattan.

March 15: SAC agreed to pay a record $616 million to settle SEC’s charges regarding Martoma’s and Steinberg’s trades.

Jan. 9: Wesley Wang, a former analyst for Sigma Capital who cooperated with the government’s investigation of insider trading, was sentenced to two years’ probation. He pleaded guilty on July 13, 2012, to two counts of conspiracy to commit securities fraud.

Dec. 17, 2012: Level Global Investors LP co-founder Anthony Chiasson, who left SAC to start a hedge fund, and former Diamondback Capital Management LLC portfolio manager Todd Newman were convicted in an insider-trading scheme that reaped more than $72 million. Horvath was charged with being part of the insider-trading scheme. Both Chiasson and Newman have been sentenced to prison and are free pending their appeal.

Nov. 20, 2012: Martoma was charged with helping SAC get hundreds of millions of dollars in illegal profit on tips provided by a doctor about a clinical trial involving an Alzheimer drug being developed by Wyeth LLC and Elan Corp. Martoma, who has pleaded not guilty, is scheduled to go to trial in Manhattan on Nov. 4.

Sept. 28, 2012: Horvath, a former technology analyst at SAC’s Sigma Capital, pleaded guilty to funneling inside information to his portfolio manager and agreed to cooperate with the U.S. He will testify for the government against Steinberg, prosecutors said.

July 29, 2011: Donald Longueuil, a former SAC Capital portfolio manager, was sentenced to 30 months for his role in an insider trading scheme that the U.S. said included his friend, former SAC portfolio manager Noah Freeman.

April 28, 2011: Former SAC analyst Jonathan Hollander agreed to settle SEC allegations that he traded on inside information about a pending takeover of the Albertsons LLC grocery chain.

Feb. 7, 2011: Former SAC fund manager Noah Freeman secretly pleaded guilty to insider trading and securities fraud and agreed to cooperate with the U.S., a day before Bharara’s office announced charges in his case. In December 2010, Freeman told FBI agents in New York that it was “understood” by SAC portfolio managers “that providing Cohen with your best trading ideas involved providing Cohen with inside information.”

Oct. 13, 2009: Former SAC fund manager Richard Choo Beng Lee, who later founded Spherix Capital, secretly pleaded guilty to conspiracy to commit securities fraud and wire fraud and a second count of securities fraud tied to the probe of Galleon Group LLC co-founder Raj Rajaratnam. His plea was disclosed the next month.

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