SAC Capital Advisors, one of the nation's largest hedge funds, has agreed to pay $1.8 billion, the largest insider-trading penalty in history, to resolve insider-trading charges.
Under the agreement, which is subject to court approval, SAC will plead guilty to each count in an indictment filed in July charging SAC with securities fraud in connection with a large-scale, insider-trading scheme.
The agreement, announced Monday, imposes a $1.8 billion financial penalty on SAC, split between a $900 million fine in the criminal case and $900 million in a civil money laundering action filed by the government along with the criminal charges. It also provides that SAC will no longer accept outside investor funds and will shut down operations as an investment adviser.
“As I said four years ago, at the time of our first major insider trading arrests, greed sometimes is not good,” Manhattan U.S. Attorney Preet Bharara said. “And there are at least 75 convicted insider trading defendants who, today, would likely agree. But individual guilt is not the whole of our mission. Sometimes, blameworthy institutions need to be held accountable too. No institution should rest easy in the belief that it is too big to jail.”
Bharara said that the settlement “is the just and appropriate price for the pervasive and unprecedented institutional misconduct that occurred here.”
Federal prosecutors charged in the indictment that from 1999 through at least 2010, numerous employees of the SAC obtained and traded on material, non-public information that they weren’t permitted to have, or recommended trades based on such information to SAC portfolio managers.
While the agreement would resolve the criminal charges against the SAC, it doesn’t provide individuals with immunity from prosecution.
Federal prosecutors haven’t yet been able to make a case against Steven A. Cohen, the 57-year-old billionaire who owns SAC, according to The New York Times article “SAC Capital Agrees to Plead Guilty to Insider Trading.”
Bharara has criminally charged eight former SAC employees, six of whom have pleaded guilty, the article said.