Charles Gasparino, 22 July 2013
After years of investigations, wiretaps, and coercing cooperation from numerous witnesses, the government’s big insider trading case against hedge fund impresario and long-time target Steve Cohen may come down to a single “failure to supervise” charge.
That’s right: No insider trading charges; no criminal charges; and no fraud allegations. It sounds like pretty weak stuff considering what the Feds believe to be the scope of the crime: numerous instances of insider trading at the massive hedge fund that Cohen runs, the Stamford, Connecticut-based SAC Capital — and possibly the direct involvement of Cohen himself in some of those trades.
But the case filed by the Securities and Exchange Commission on Friday shouldn’t be taken lightly—and it certainly won’t be by Cohen and his legal team, who know that the Feds aim to put Cohen out of business once and for all.
The fact is that even without charging Cohen with insider trading or fraud, the SEC is empowered to seek penalties as if the hedge fund titan had committed those acts. It’s the same deal facing former MF Global chief Jon Corzine: The feds apparently don’t have the evidence that Corzine had ordered the misuse of around $1 billion in customer funds some of which remains missing, as the firm tanked back in late 2011. But what happened on his watch can’t be condoned, regulators believe. So they’re seeking to ban Corzine from the securities business for life.