US files charges against hedge fund founder Cohen
WASHINGTON (AP) — The Securities and Exchange Commission on Friday filed civil charges against Steven A. Cohen, accusing the billionaire hedge-fund manager of failing to prevent insider trading at the fund he founded.
Cohen founded and runs SAC Capital Advisors. The government has called the SAC Capital Advisors case one of the biggest insider-trading fraud cases in history.
The SEC said Cohen failed to supervise two senior employees of SAC Capital and prevent them from illegal insider trading. As a result of illegal trades by Cohen’s hedge funds, the funds reaped profits and avoided losses of more than $275 million, the SEC said.
The SEC is seeking unspecified fines against Cohen. The case will be heard by an administrative law judge at the SEC.
“Cohen received highly suspicious information that should have caused any reasonable hedge fund manager in Cohen’s position to take prompt action to determine whether employees under his supervision were engaged in unlawful conduct and to prevent violations of the federal securities laws,” the SEC said in its filing.
A spokesman for SAC Capital said the allegations have “no merit” and Cohen “will fight this charge vigorously.”
“Steve Cohen acted appropriately at all times,” spokesman Jonathan Gasthalter said in a statement.
The SEC’s action against SAC, one of the best-known hedge funds, stemmed from the wide-ranging government investigation of insider trading at U.S. hedge funds. Earlier this year, an affiliate of SAC Capital agreed to pay $615 million to resolve the SEC’s insider trading charges against the firm. The agency said it was the largest insider trading settlement ever.
Cohen is one of the highest profile figures in American finance and one of the world’s richest men. He is among the handful of upper-tier hedge fund managers who pull in about $1 billion a year in compensation.
His hedge fund until recently managed portfolios of more than $15 billion in assets, according to the SEC.