Steve Cohen probably isn’t going to save the Mets
Sheryl Ring, 07 December 2019
In November 2013, SAC Management Companies, a hedge fund operated by new Mets owner Steve Cohen, agreed to pay $1.8 billion – with a B – to resolve insider trading and money laundering charges.
Under the Agreement, which is subject to Court approval, the SAC Companies will plead guilty to each count in which they are charged of an indictment (the “Indictment”) unsealed in July of this year charging the SAC Companies with securities fraud and wire fraud in connection with a large-scale insider trading scheme. The Agreement imposes a $1.8 billion financial penalty on the SAC Companies – the largest insider trading penalty in history – split between a $900 million fine in the criminal case (the “Criminal Case”), and a $900 million forfeiture judgment in a civil money laundering and forfeiture action (the “Forfeiture Action”) filed by the Government simultaneously with the criminal charges. It also provides that the SAC Companies and their affiliates will no longer accept outside investor funds and will shut down operations as an investment adviser.
The Agreement between the Government and the SAC Companies to plead guilty to all of the charges in the Indictment in which they are charged and resolve the Forfeiture Action is subject to judicial review and approval. The Government submitted the Agreement this morning to U.S. District Judge Laura T. Swain, who is presiding over the Criminal Case, captioned United States v. S.A.C. Capital Advisors, L.P., et al., 13 Cr 541 (LTS), and U.S. District Judge Richard J. Sullivan, who is presiding over the Forfeiture Action, captioned United States v. S.A.C. Capital Advisors, L.P., et al., 13 Civ. 5182 (RJS). The Agreement has no force unless and until it is approved by the district judges.
Three years later, Cohen and his companies settled a separate civil insider trading lawsuit for over $135 million. One of Cohen’s most senior employees, Matthew Martoma, was sentenced to nine years in prison for his role in “the most profitable insider trading scheme in U.S. history.” Cohen himself refused to answer questions from SEC investigators (including even what his name was) on Fifth Amendment grounds. Other guilty pleas for traders who cooperated with the investigation were later vacated.
