Why SAC Capital’s Steven Cohen Isn’t in Jail
Sheelah Kolhatkar, 03 January 2014
Ten thousand dollars an hour worth of lawyers filed into a courtroom in lower Manhattan on the morning of Nov. 8. The legal team represented Steven Cohen’s hedge fund, SAC Capital Advisors, which had agreed to pay $1.2 billion to settle criminal charges that it had engaged in securities fraud. The hearing was the culmination of a long legal struggle between SAC and the government that has dramatically altered what was once one of Wall Street’s most powerful firms. Eight former or current SAC employees have been charged with insider trading. Six of them have pleaded guilty; one, Mathew Martoma, is due to go on trial on Jan. 6, and another, Michael Steinberg, was convicted on Dec. 18 of insider trading in two technology stocks.
Separately, Cohen was charged in a civil case with failing to supervise his employees by the Securities and Exchange Commission, which is seeking to bar him from the securities industry. Cohen’s company is transforming itself into a much smaller operation that manages only Cohen’s money. SAC had fostered an unprecedented “culture of corporate corruption,” U.S. Attorney Preet Bharara said when the criminal charges against the company were first unveiled.
