SAC receives record US$1.8bn for insider trading

(Reuters) – Steven A. Cohen‘s embattled hedge fund SAC Capital Advisors will plead guilty in federal court and pay $1.8 billion to settle charges stemming from an insider trading investigation that lasted more than five years, prosecutors said on Monday.

The two sides reached a settlement agreement which, if approved by a judge, would also resolve a civil forfeiture action against SAC and its affiliates, prosecutors said.

Sources have told Reuters the total settlement amount will include a $616 million penalty that SAC had already agreed to pay earlier this year to settle civil lawsuits by the U.S. Securities and Exchange Commission for insider trading will count towards the latest deal.

U.S. prosecutors in July charged the hedge fund – which managed as much as $14 billion this year before investors began withdrawing money – with presiding over a culture in which employees flouted the law and were encouraged to tap personal networks for inside information about publicly traded companies. Reuters

Out of business

The enormous financial penalty will send shockwaves through the hedge fund US-ECONOMY-FINANCE-CRIMEsector, as Cohen’s firm faces closure. Some news sources are reporting the SEC’s censure will force the firm and Cohen out of the investment business permanently. Others report SAC will merely be busted down from the giddy heights of hedge funds to a more sedate family office.

Cohen does have more pressing concerns, however. New York District Attorney, Preet Bharara told a press conference that the investigation is far from over, and individual prosecutions could be on the cards.

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