Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Friday, June 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Billionaire Can’t Manage Money for Two Years

(CN) - Billionaire hedge-fund manager Steven Cohen is banned from managing others' money until 2018 as part of an SEC settlement over criminal insider trading at his firm SAC Capital.

In 2013, the U.S. Securities and Exchange Commission charged hedge-fund billionaire Steven A. Cohen, 59, with failing to supervise insider-trading employees at SAC Capital Advisors, the hedge fund named for Cohen's initials. Cohen's net worth is approximately $11.4 billion.

The agency charged him after it laid out securities fraud claims against his employee Matthew Martoma, 41, a portfolio manager at SAC wholly owned subsidiary, CR Intrinsic Investors, which had $2.8 billion in assets under management.

Martoma was convicted in 2014 of helping investors avoid losses of more than $276 million by trading ahead of a negative public announcement involving the clinical trial results for an Alzheimer's drug developed by Wyeth and Elan Corp. He was sentenced to nine years in federal prison.

The SEC claimed Cohen "failed reasonably to supervise one of his senior employees, who engaged in insider trading."

Cohen allegedly knew Martoma might have had access to inside information, and encouraged him to talk to a doctor about the non-public trial results, but did not investigate whether Martoma used the information illegally.

The SEC dropped charges brought against other former SAC Capital traders last year after exhausting its appeal of a ruling that raised the bar for insider-trading convictions.

The agency settled with Cohen's firms CR Intrinsic, for $600 million, and SAC Capital, for $1.2 billion, but the hedge fund was not required to admit wrongdoing.

On Friday, the SEC announced it had reached an agreement with Cohen himself to settle charges stemming from his oversight of Martoma.

Cohen will be banned from supervising funds that manage outside money until 2018. His firms must submit to SEC examinations, and he must hire an independent consultant through 2017 to review the firms' compliance with securities laws and adopt his or her recommendations.

The settlement does not require him to admit wrongdoing.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.