NEW YORK, July 23 (UPI) -- Lawyers for hedge fund manager Steven Cohen struck back at U.S. regulators, saying there was no proof he neglected his managerial duties.
In a 46-page report distributed to employees of the hedge fund SAC Capital Advisors, Cohen's lawyers said the charges against the founder of the firm were "baseless" and there was proof Cohen did not read a key email that regulators say gave clear evidence that insider information was being used at the firm.
Cohen's lawyers said he received 1,000 emails per day and ready only 11 percent of them, The Wall Street Journal reported Tuesday.
The Securities and Exchange Commission Friday charged Cohen with neglecting his duties as a manager, seeking to have Cohen banished for life from working in the financial industry.
Lawyers said Cohen was on the phone when an email arrived in August 2008 that included what regulators said was "the clear possibility," that insider information was behind a decision to sell shares of Dell Inc.
Soon after the email arrived, Cohen began selling his Dell shares.
His lawyers said Cohen sold his Dell holdings because a portfolio manager at another hedge fund was also selling "a portion of his Dell stock."
Cohen's lawyers said Cohen sold stocks of Wyeth and Elan Corp. based on the an employee's "recommendation to reduce SAC's exposure on a position that had appreciated approximately 40 percent in the previous six weeks."
Regulators said Cohen reduced his position based on insider information concerning a drug study that showed development of an Alzheimer's treatment was not going well.
Cohen's lawyers said that was just business as usual. SAC dropped its exposure to the drug companies "at a time of volatile and declining general market trends."
As such, selling the drug company stocks "was perfectly reasonable," Cohen's lawyers asserted.