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Friday, 15 March 2013

Crime of the week: SAC

Two affiliates of SAC Capital, the giant hedge fund, settled insider trading charges with the Securities and Exchange Commission for $614 million on Friday, in what the agency was the biggest ever settlement for such cases. The settlements spare SAC’s founder, Steven A. Cohen, who hasn’t been charged with wrongdoing.  Also he gets to keep his billions.

Mr. Cohen, one of the most successful hedge fund managers in the world, has long been considered a dodgy dealer .. errm ... target of federal investigators.

The amounts paid by SAC surpass the $400 million that Michael Milken paid to settle charges by the agency in 1990. But such are the low standards of today that this will pass without a murmur and unlike Mr Milken who ate a lot of porridge, the US judicial system is unlikely to be troubled by Mr Cohen.

One affiliate of SAC, CR Intrinsic, agreed to pay over $600 million over charges tied to one of its employees, who is accused of trading on illicitly obtained confidential information about the drug makers Elan and Wyeth.  The other affiliate, Sigma Capital Management, agreed to pay $14 million to settle charges that it engaged in insider trading in the stocks of Dell and Nvidia. SAC’s management company will pay the settlements, meaning that investors of the hedge fund are not on the hook

Which is good for investors who get to keep their illicit gains.

A spokesman for SAC said in a statement, “We are happy to put the Elan and Dell matters with the S.E.C. behind us. This settlement is a substantial step toward resolving all outstanding regulatory matters and allows the firm to move forward with confidence." You bet your bippy they are!

Which makes it all the more amazing that a firm can be found guilty of insider trading, fined such an enormous amount, and yet be considered fit and proper to carry on in business.

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