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Tuesday, May 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Record $616 Million Settlement With SEC

(CN) - SAC Capital Advisors will pay a record $616 million to settle two insider-trading lawsuits filed by the Securities and Exchange Commission.

SAC, one of the nation's most successful hedge funds with $15 billion in assets, did not admit or deny the allegations.

"This settlement is a substantial step toward resolving all outstanding regulatory matters," SAC said in a statement.

Federal prosecutors and regulators said they are still investigating whether SAC and its billionaire founder Steven A. Cohen traded illegally on inside information.

The investment firm has faced civil and criminal investigations accusing at least six current and former employees were involved in insider trading.

Four pleaded guilty to federal charges, including former SAC analyst Jon Horvath. Horvath said he passed nonpublic information about Dell and Nvidia to his portfolio managers.

He and three other former SAC employees are said to be cooperating with authorities.

SAC and Sigma Capital Management agreed to settle its potential civil liability in that case for $14 million.

In the big settlement, SAC unit CR Intrinsic Investors ended its potential liability based on insider-trading allegations against former portfolio manager Mathew Martoma.

Federal prosecutors in November accused Martoma of using inside information about an Alzheimer's drug trial to help the firm make $278 million in illicit profits.

Martoma has pleaded not guilty to securities fraud and conspiracy.

Although Cohen has not been charged with any wrongdoing by the SEC, he was sued in 2009 by his ex-wife, Patricia, who claims he hid millions from her during their divorce. She claims he made a lot of his money from insider trading.

SEC officials said the $616 million penalty is "by far the largest" ever in an insider-trading case.

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