SAC pleads not guilty

July 26, 2013 at 11:54 AM
share with facebook
share with twitter

NEW YORK, July 26 (UPI) -- SAC Capital Advisors LP Friday entered a plea of not guilty in Manhattan on five counts of fraud involving insider trading allegations.

The Justice Department has charged the hedge fund that managed about $15 billion at the start of the year with allowing insider trading to occur despite numerous red flags that should have made it clear confidential information was being used illegally.

Without admitting any wrongdoing, the firm agreed in April to pay $616 million to settle Securities and Exchange Commission charges of insider trading.

On Friday, the SEC charged the fund's founder Steven Cohen with neglecting his duties as a manager, seeking to have him barred from the financial industry for life.

Cohen's lawyers said the case against him was "baseless." But prosecutors have said the company's track record on insider trading was "on a scale without known precedent," noting that the firm's compliance office has on record only one incident that included an accusation of insider trading despite the point that six of its traders have pleaded guilty in court or been convicted of insider trading activities, The Wall Street Journal reported Friday.

Despite the April settlement, it now appears the gloves are off. The Journal reported this week that no settlement talks were under way. In describing the case against the firm, FBI assistant director George Venizelos in New York said: "To be blunt, SAC, through the actions and inactions of its management, not only tolerated cheating, it encouraged it."

Prosecutors have also said losses avoided plus profits made from the fraudulent activities at the company in 20 years added up to some $10 billion. Prosecutors also said they planned to recover "any and all" assets that were earned illegally.

Related UPI Stories
Trending Stories