Federal prosecutors and regulators are aggressively moving to put legendary hedge fund SAC Capital Advisors out of business. The Securities & Exchange Commission last week brought an administrative action against Steve Cohen, alleging the billionaire founder and owner of SAC failed to supervise employees who were engaged in insider trading. Now, Preet Bharara, the U.S. Attorney in Manhattan is reportedly set to indict SAC Capital in the next few days, which likely would put the hedge fund firm that manages $15 billion out of the business of managing external funds. …read more
It hasn’t been the best week for Steven Cohen. The founder of SAC Capital Advisors (“SAC“), a Wall Street hedge fund envied for its seemingly-uncanny ability to consistently produce outsized returns even in the face of economic turmoil, has thus far managed to shrug off worries that he could be implicated in the extensive insider-trading investigation hanging over SAC and several former and current employees. However, a series of recent events may be cause for concern, as the arrest of another key SAC trader on insider-trading charges ratchets up pressure on Cohen, while a federal judge threatened to reject a proposed record-breaking $616 million civil settlement between SAC and the Securities and Exchange Commission. Coupled with an expiring statute of limitations for a key portion of the insider-trading allegations, a perfect storm may be looming directly overhead Cohen. A Perfect Trade… The investigation into SAC began as authorities began taking a closer look into the relationship between ‘expert-networking’ firms and hedge funds. The so-called expert-networking firms offer to put hedge fund investors in contact with experts in various fields. These experts, often current or former employees, command exorbitant fees to divulge their knowledge of often-sensitive topics, including company strategies and other valuable insights. One such ‘expert-networking’ firm that attracted regulator scrutiny was Gehrson Lehrman Group (“GLG”), widely recognized as a leader in that industry. …read more
I am frequently asked by the press for my opinion about the latest, greatest insider trading case — which, apparently, is whichever case was most recently filed by the Department of Justice or the Securities And Exchange Commission. A while back it was Martoma. Then it was Conradt and Weishaus. And let’s not forget all the chatter about SAC and its former and current associates. Tomorrow — well, we’ll just have to wait and see. Place your bets. …read more
Steven Cohen has been garnering headlines, thanks to insider trading charges at his hedge fund SAC and rumors that he paid a record sum for a Picasso painting. But Cohen has also reportedly plunked down $60 million for an oceanfront property in the Long Island, N.Y., community of East Hampton, according to the New York Times. The billionaire investor, who already owns an $18 million Hamptons estate down the street and a 35,000-square foot main residence in tony Greenwich, Conn., is also said to be selling a duplex apartment in New York City’s Bloomberg Tower. The price tag: $115 million. …read more Source: FULL ARTICLE at Forbes Latest
Ronda Churchill/Bloomberg via Getty Images Steven Cohen, founder and CEO of SAC Capital Advisors LP.
Michael Steinberg, a portfolio manager at Steven A. Cohen’s $15 billion hedge fund, was arrested by the Federal Bureau of Investigation at his home in New York City early on Friday morning in connection with a long-running insider-trading investigation, an FBI spokesman said.
Federal prosecutors had been considering indicting Steinberg on charges that he traded shares of Dell Inc. (DELL) on insider information, sources close to the matter said on Thursday.
Steinberg’s lawyer Barry Berke said in a statement to Reuters that his client had done “absolutely nothing wrong.”
“At all times, his trading decisions were based on detailed analysis as well as information that he understood had been properly obtained through the types of channels that institutional investors rely upon on a daily basis,” Berke said.
Steinberg, 40, is the most senior SAC Capital Advisors employee to be charged in the U.S. government‘s probe into how hedge funds may use illegally obtained information to trade. Including Steinberg, nine people have been either charged or implicated with wrongful trading while they were employed at the Stamford, Conn.-headquartered SAC.
An SAC Capital spokesman had no immediate comment on the arrest.
Steinberg’s arrest had been widely expected after Jon Horvath, a former SAC analyst who worked closely with him, pleaded guilty last year to using illegally obtained information to trade in Dell and Nvidia Corp. (NVDA). Horvath has been cooperating with the government and had implicated Steinberg.
SAC Capital suspended Steinberg from his post in October 2012, and he has been moving among several hotels in New York City in recent weeks, according to Reuters sources, as he wanted to avoid being arrested at his Upper East Side home where he lives with his wife and two children.
The arrest comes two weeks after SAC agreed to pay a record $616 million to the U.S. Securities and Exchange Commission to settle civil charges of insider trading. SAC neither admitted nor denied wrongdoing at that time.
But the government made clear that that settlement didn’t preclude further charges.
As part of that settlement, SAC Capital agreed to pay $14 million to settle charges of improper trading in Dell, in which a former trader who reported to Steinberg had been involved.
Stan Honda/AFP/Getty Images A 1997 photo shows Christie’s Chairman Christopher Burge starting bidding for Pablo Picasso‘s painting “Le Reve” at an auction in New York. On Tuesday, hedge-fund manager Steve Wynn paid a reported record $155 million for the artwork.
NEW YORK — Hedge fund manager Steven A. Cohen has bought a famous Picasso painting from casino mogul Steve Wynn for a record price, according to a report in the New York Post on Tuesday.
Cohen, who runs $15 billion hedge fund firm SAC Capital Advisors, purchased “Le Reve,” a 1932 oil painting of Picasso’s mistress, for $155 million, the New York Post said, citing an unnamed source.
The Post reported it is the highest price a U.S. collector ever paid for an artwork.
Cohen and Wynn, who are both billionaires and well-known art collectors, have a history with this particular Picasso painting.
In 2006, Wynn put his elbow through the canvas of “Le Reve” while showing it to several friends, reportedly a day after agreeing to sell it to Cohen for $139 million, several media outlets reported at the time.
Cohen’s reported acquisition of “Le Reve” comes as his firm continues to face regulatory scrutiny as part of a multi-year federal insider trading probe that has ensnared nine former SAC employees. Earlier this month, SAC Capital agreed to pay a record $616 million fine to settle two lawsuits, the largest-ever U.S. insider trading settlement.
A spokesman for Cohen declined to comment. A spokesperson for Wynn, the chief executive officer of Wynn Resorts Ltd. (WYNN), didn’t respond to a request for comment.
(Spencer Platt/Getty Images)Mathew Martoma walks with his wife Rosemary and his lawyer after leaving Manhattan federal court on Jan. 3 in New York City. Martoma worked for CR Intrinsic Investors, which Friday agreed to pay more than $600 million to settle insider-trading charges.
By SARAH SKIDMORE
Two affiliates of SAC Capital Advisors, the hedge fund run by billionaire Steven Cohen, will pay more than $614 million in what federal regulators are calling the largest insider trading settlement ever.
The Securities and Exchange Commission charged CR Intrinsic Investors with insider trading in 2012, alleging that portfolio manager Mathew Martoma illegally obtained confidential details about an Alzheimer’s drug trial from a doctor before the final results went public and traded on that information. The SEC said Friday that the fund agreed to pay more than $600 million to settle the charges. The parties neither admit nor deny the charges.
The SEC‘s complaint alleged that Sidney Gillman, a doctor who moonlighted as a medical consultant, tipped drug safety data and negative drug trial results to Martoma two weeks before developers Elan Corp. and Wyeth made those results public in 2008. Martoma and CR Intrinsic then caused several hedge funds to sell more than $960 million in Elan and Wyeth securities in a little more than a week.
Regulators added SAC Capital Advisors and four hedge funds managed by CR Intrinsic and SAC Capital as defendants, saying they each received ill-gotten gains from the scheme.
“The historic monetary sanctions against CR Intrinsic and its affiliates are a sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm,” George S. Canellos, acting director of the SEC‘s Division of Enforcement, said in a statement.
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The settlement is subject to the approval of a U.S. District Court judge. It does not settle charges against Martoma, whose case is still in litigation.
Also Friday, the SEC settled charges against Sigma Capital Management for $14 million. Sigma allegedly profited illegally from early information about the earnings of two technology companies.
The cases stem from a long-running probe of insider trading by hedge funds, many of which are affiliated with SAC Capital. The government has targeted multiple employees of the Stamford, Conn.-based hedge fund, though no charges have been brought against Cohen.
SAC said in a statement Friday that it is happy to put these matters with the SEC behind it.
“This settlement is a substantial step toward resolving all outstanding regulatory matters and allows the firm to move forward with confidence,” the company said. “We are committed to continuing to maintain a first-rate compliance effort woven into the fabric of the firm.”
A hedge fund company will pay more than $600 million in what federal regulators are calling the largest insider trading settlement.
The Securities and Exchange Commission said Friday that CR Intrinsic Investors has agreed to settle charges that it traded on non-public information about trials of an Alzheimer’s drug.
The commission also settled charges against Sigma Capital Management for $14 million. Sigma allegedly profited illegally from early information about the earnings of two technology companies.
The cases stem from a long-running probe of insider trading by hedge funds, many of which are affiliated with SAC Capital Partners. CR Intrinsic was an affiliate of SAC. A separate SAC affiliate fund allegedly benefited from Sigma’s actions.
An affiliate of SAC Capital Advisors LP agreed to pay more than $600 million to settle U.S. Securities and Exchange Commission charges that it participated in an insider trading scheme, the largest settlement of its kind.
The affiliate, CR Intrinsic Investors, had been charged with insider trading in November, when the SEC said one of its portfolio managers, Mathew Martoma, illegally obtained confidential details about a clinical trial for an Alzheimer’s drug.
The SEC also said another hedge fund firm with ties to SAC, Sigma Capital Management, agreed to pay nearly $14 million to settle a separate insider trading case.
The U.S. Securities and Exchange Commission (SEC) said today that the CR Intrinsic unit of hedge fund SAC Capital has agreed to pay $600 million to settle insider trading charges brought by the SEC against the firm. Another unit of SAC Capital, Sigma Capital Management, has agreed to pay a fine of nearly $14 million to settle charges that it engaged in insider trading in shares of Dell Inc. (NASDAQ: DELL) and Nvidia Corp. (NASDAQ: NVDA) in 2008 and 2009.
A former SAC Capital, Jon Horvath, pleaded guilty to insider trading in September and has been cooperating with the investigations into SAC Capital and its affiliates.
Today’s settlement with SAC includes nearly $275 million in disgorgement, $52 million in interest payments, and another $275 million in penalties. The SEC‘s acting director of enforcement said:
The historic monetary sanctions against CR Intrinsic and its affiliates are sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm.
Both settlements are subject to the approval of the federal district court.
Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Their latest moves can shine a bright light on smart stock picks.
Today, let’s look at SAC Capital Advisors, which is run by Steven Cohen. SAC is one of the biggest hedge funds around, with a reportable stock portfolio totaling $20.3 billion in value as of Dec. 31, 2012. A fund doesn’t easily grow that large without performing well and, indeed, Cohen has reportedly averaged returns of roughly 30% annually over two decades.
The company has been in the news more than usual lately, though, due to an insider trading scandal. Prosecutors are investigating, with the Securities and Exchange Commission (SEC) waiting before taking actions of its own.
Interesting developments So what does SAC Capital’s latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Alcatel-Lucent and O’Reilly Automotive. It also added lots of other companies, such as Infinera . Alcatel-Lucent has long been struggling, saddled with debt, heavily shorted, and aiming to cut costs. It may be turning itself around successfully, though, as it’s among the most upgraded tech stocks over the past three months. The France-based company has been building a valuable wireless network in the U.S. and has a new CEO. It has been collecting new contracts for work around the globe, such as in India and Iraq, and is establishing itself in China, too.
Among holdings in which SAC Capital increased its stake was Cliffs Natural Resources , which has seen its stock figuratively fall off a cliff, down 60% over the past year. Investors were further dismayed recently, when the company announced a 76% dividend cut and plans to raise money by boosting its share count by 6%. At this point, with a forward P/E of about 9, some wonder whether it’s a bargain.
SAC Capital reduced its stake in lots of companies, including American Capital Agency , which offers investors a huge dividend yield topping 15%. There are concerns that the dividend may get reduced, but even if it’s cut in half, it will remain substantial. In the meantime, the company recently benefited from an increased interest rate spread higher than some high-profile peers. It has also boosted the proportion of its portfolio that isn’t likely to suffer from borrowers refinancing and prepaying mortgages. In 2012, the company delivered a total economic return of 32% to shareholders. You might still want to be wary, though, as there are some aspects of the company that aren’t too appealing, and it’s quite sensitive to changes in interest rates and inflation.
