The Conversation, 26 July 2013
After causing the collapse of the Galleon Group hedge fund in 2009, insider trading enforcements have once again shaken the hedge fund industry. Late last week, the US Securities and Exchange Commission (SEC) charged Steven A. Cohen, CEO of SAC Capital Advisors LP, one of the world’s largest hedge funds, with failing to supervise two of his managers, Mathew Martoma and Michael Steinberg, who traded on material non-public information concerning three US listed companies in 2008.
As a result of these illegal insider trades, SAC Capital Advisors earned profits and avoided losses of almost $300 million. If the high-profile administrative suit of the SEC proves to be successful on August 26, Cohen could face a permanent bar from the financial services industry, leaving the survival of SAC Capital on the edge and sending shivers through the entire hedge fund industry