Courtesy of Pam Martens.
US Attorney Preet Bharara Files a Criminal Indictment Against SAC Capital on July 25, 2013
U.S. Attorney Preet Bharara of the Department of Justice released a criminal indictment yesterday against one of the most well known hedge funds on Wall Street, SAC Capital Advisors. Bharara said the firm had institutionalized insider trading as a business model over more than a decade, incentivizing employees who provided hot insider tips with large bonuses, which in turn molded the company into a “veritable magnet for market cheaters.” Eight former employees have been charged and six have already pleaded guilty.
In the past, when large financial firms which hold customer assets have been charged in a criminal indictment, the company has unraveled within a brief period of time.
According to media reports, the government may seek as much as $10 billion from SAC as forfeiture for the crimes committed. That raises questions about the $187 million in charitable donations that Steven A. Cohen, owner of SAC Capital, and his wife, Alexandra, have donated to charities since 2005 through their foundation.
On July 19 of this year, Cohen himself was charged in a civil complaint by the Securities and Exchange Commission for failing to supervise two traders under his watch and prevent them from engaging in insider trading. According to the SEC, “Cohen received highly suspicious information that should have caused any reasonable hedge fund manager to investigate the basis for trades made by two portfolio managers who reported to him – Mathew Martoma and Michael Steinberg.” Instead, according to the SEC, “Cohen ignored the red flags and allowed Martoma and Steinberg to execute the trades. Instead of scrutinizing their conduct, Cohen praised Steinberg for his role in the suspicious trading and rewarded Martoma with a $9 million bonus for his work.” The company settled its civil charges with the SEC in March for $614 million. Martoma and Steinberg have pleaded not guilty.
Steven A. Cohen Speaking On Behalf of the Anti-Poverty Nonprofit, the Robin Hood Foundation
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