SAC Capital to settle in record $1.8bn agreement on insider trading case
Hedge fund SAC Capital is to settle on insider trading charges involving trading in Elan shares.
The embattled firm will plead guilty in a US federal court and pay $1.8bn (€1.3bn) over charges stemming from an insider trading investigation that lasted more than five years.
The two sides reached a settlement agreement that, if approved by a judge, would also resolve a civil forfeiture action against SAC and its affiliates.
The total settlement amount, the largest ever for an insider trading case, will include a $616m penalty that SAC had already agreed to pay earlier this year to settle civil lawsuits by the US Securities and Exchange Commission (SEC) for insider trading.
SAC will also close the affiliate SAC capital hedge funds to outside investors.
The hedge fund – which managed as much as $14bn this year before investors began withdrawing money – was charged with presiding over a culture in which employees flouted the law and were encouraged to tap personal networks for inside information about publicly traded companies.
Though it won't necessarily end the effort, the deal will punctuate one of the longest-running, highest-profile insider trading investigations.
US Attorney Preet Bharara will appear alongside April Brooks, who is in charge of the Federal Bureau of Investigation's criminal division in New York, at a press conference at 6pm GMT to discuss the deal.
Jonathan Gasthalter, a spokesman for SAC Capital, did not immediately respond to a request for comment.
SAC's founder, Steven Cohen, is still facing an administrative action brought in July by the SEC accusing him of failing to properly supervise his employees. The case was stayed in August after the firm was indicted. It was not clear whether yesterday's deal with prosecutors would resolve that case.
Mr Cohen himself has not been charged with any criminal wrongdoing. The indictment against SAC includes charges of wire fraud and securities fraud, and named seven one-time employees of the firm who have either been charged or convicted of insider trading. (© Daily Telegraph, London)