BARBARA ROSS and BILL HUTCHINSON, 26 July 2013
Wall Street’s richest hedge fund, SAC Capital Advisors, owned by billionaire Steven Cohen, was indicted Thursday by a federal grand jury on charges of being an insider-trading machine. Prosecutors charge that SAC made “hundreds of millions of dollars of illegal profits” from 1999 to 2010 by recruiting employees based on trade secrets they brought to the firm, or if they had the know-how to get them.
The scheme “was substantial, pervasive and on a scale without known precedent in the hedge-fund industry,” the indictment charges.
“SAC not only tolerated cheating, it encouraged it,” said George Venizelos, head of the FBI’s New York office.
Eight SAC employees have already been charged in the investigation and six have pleaded guilty. An SAC affiliate has agreed to pay $615 million to settle federal charges. Hedge-fund honcho Cohen has avoided charges, so far, but could end up losing his fortune if the feds are successful in forcing him to forfeit his company’s assets.
“I’m not going to say what tomorrow may or may not bring,” said U.S. Attorney Preet Bharara. “The investigation is continuing.”