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Cohen Considers Deal that May Close SAC Cap to External Investors

May 21, 2013
Jing Chen

Hedge fund manager Steve Cohen is considering proposing a deal to federal prosecutors that would close his firm to outside investors.

Bloomberg reported that under the deal, known as a deferred prosecution agreement, Cohen's Connecticut-based SAC Capital Advisors would admit wrongdoing but would not be prosecuted unless it breaks the law again. In addition to paying an undisclosed fine, the agreement would also entail that Cohen shut SAC Capital to outside investors and transition into a family office.

Cohen and several SAC executives received subpoenas last week to testify before a grand jury regarding the firm’s insider trading activities, according to an eVestment article.

Several SAC portfolio managers were hit by insider trading allegations, including Michael Steinberg and Mathew Martoma. Steinberg was charged last month for allegedly making over $1.4 million for the hedge fund trading on shares of computer maker Dell, Inc. and chipmaker Nvidia Corp. SAC recently shelled out approximately $602 million to settle insider trading charges involving Martoma, who allegedly made over $250 million for the firm using insider information he received regarding an Alzheimer disease drug trial.

Neither SAC nor Cohen has been charged with any wrongdoing.

With about 1,000 employees across five offices throughout the world, SAC manages about $15 billion in assets.

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