NEW YORK, Nov. 4 (UPI) -- U.S. prosecutors said Monday that hedge fund SAC Capital Advisors LP would pay a record $1.2 billion to settle insider trading charges against it.
The penalty, which has to be approved by a federal court, is separate from a $616 million settlement paid to the Securities and Exchange Commission earlier this year for insider trading charges.
The firm, founded by Steven A. Cohen, whose initials create the name of the firm, has been the subject of a prolonged investigation that has included six former employers pleading guilty to insider trading, The Wall Street Journal reported.
Two other former employees are scheduled to go on trial to face similar charges.
The fines in the case are "steep but fair, and are commensurate with the breadth and duration of the charged criminal conduct," U.S. Attorney Preet Bharara wrote to the judges who have final say on the penalties.
Bharara said the penalty was "to the government's knowledge, the largest financial penalty in history for insider trading offenses."
Cohen was not charged with insider trading, but his lawyers are negotiation with regulators to settle charges that he ran a firm where, prosecutors said, there was a pervasive culture of allowing confidential information to be used when making market bets.
At stake is, potentially, more financial penalties, but also the possibility that Cohen could be banned from working in the finance industry except that he would be allowed to manage his own funds.
The firm that once managed $15 billion in funds is expected to become a private business that manages the $9 billion owned by Cohen and SAC employees.
If the judges approve the case, SAC is expected to enter a guilty plea, a sign of the new resolve of some regulators to end the practice of allowing companies to pay penalties without having to admit to any wrongdoing.
Cohen is one of the titans of the hedge fund industry and his firm one of the most profitable, having earned 25 percent on investments for two decades, the Journal said.
