SAC Changes Statement After Violation Said to Be FoundPatricia Hurtado
SAC Capital Advisors LP, the hedge fund that agreed to plead guilty and pay a record $1.8 billion, changed a press statement after it was told it could be violating the terms of its plea agreement, a person familiar with the matter said.
The firm, founded by Steven A. Cohen, said in its initial statement yesterday that “SAC has never encouraged, promoted or tolerated insider trading.” That appeared to contradict the fund’s acceptance of responsibility in the accord reached with federal prosecutors in New York, potentially scuttling the agreement, said the person, who asked not to be identified because the matter wasn’t public.
Hours later, that line was deleted in the second statement by the Stamford, Connecticut-based firm. “Even one person crossing the line into illegal behavior is one too many and we greatly regret this conduct occurred,” according to the new statement.
The company, indicted in July, was accused of operating a conspiracy stretching back to 1999, reaping hundreds of millions of dollars in illicit profit. Cohen, 57, wasn’t charged in the indictment. He still faces an administrative action filed by the U.S. Securities and Exchange Commission for his alleged failure to supervise the hedge fund’s activities.
The fund’s penalty includes $616 million that Cohen, SAC’s owner, agreed to pay the SEC to settle a related lawsuit in March. SAC also has agreed to close the affiliate SAC capital hedge funds to outside investors, the U.S. said.
Jonathan Gasthalter, a spokesman for SAC with Sard Verbinnen & Co., didn’t immediately respond yesterday to an e-mail seeking comment on the revised statement.
Jim Margolin, a spokesman for the office of Manhattan U.S. Attorney Preet Bharara, declined to comment on the revision.
According to SAC’s plea deal submitted yesterday to a federal judge in New York who must approve it, SAC declared, “Each of the SAC entity defendants hereby acknowledges that it has accepted this agreement and decided to plead guilty because it is in fact guilty. By entering this plea of guilty, each of the SAC entity defendants waives any and all rights to withdraw its plea or to attack its conviction, either on direct appeal or collaterally.”
The criminal case is U.S. v. SAC Capital Advisors LP, 13-cr-00541, U.S. District Court for the Southern District of New York (Manhattan). The civil case is U.S. v. SAC Capital Advisors LP, 1:13-cv-5182, U.S. District Court, Southern District of New York (Manhattan).