Billionaire hedge fund manager Steven A. Cohen’s hedge fund will plead guilty to five counts, pay a $1.8 billion fine, and shut down its outside business.
Preet Bharara, the crusading U.S. attorney, has beat Steven A. Cohen, once considered the most successful hedge fund trader of all time.
The U.S. attorney's office announced this morning that SAC Capital Advisors, Cohen's hedge fund that contains several smaller funds and companies, will plead guilty to five counts of securities fraud. While Cohen himself will not plead guilty, he is named several times in the July federal indictment.
At its peak, the fund managed $15 billion of outside money, but is now down to only $9 billion in assets under management, mostly Cohen's own fortune.
The criminal indictment covered more than 10 years of what prosecutors described as "systematic" insider trading that involved SAC traders acquiring information about companies financial results and products and then making large trades, buying or selling the companies' stock, before the information became more widely known.
The indictment said the traders exhibited "a pattern of obtaining Inside Information from dozens of publicly-traded companies across multiple industry sectors," and then making trades or recommending trades to Cohen.
While the indictment nor the guilty plea named Cohen, prosecutors said that Cohen "fostered a culture that focused on not discussing Inside Information too openly, rather than not seeking or trading on such information in the first place."
The guilty plea for the firm as a whole follows a years-long investigation by federal prosecutors that has seen six former SAC traders pleading guilty and two more still waiting to go to trial.
There is still an SEC civil action against Cohen that alleges that he failed to properly supervise traders engaged in insider trading.
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