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NY Judge Approves SAC Capital's $600 Million Insider Trading Settlement

April 16, 2013 | About:
Monica Wolfe

Monica Wolfe

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Today a New York judge approved the massive $602 million settlement that would resolve the insider trading scandal involving SAC Capital Advisors and Mathew Martoma. Judge Victor Marrero made a statement agreeing that the settlement payment is fair. He also claimed that he is “troubled” by the fact that CR Intrinsic Investors, the fund associated with Guru Steven Cohen and SAC Capital, were simply able to write a check and be done with the whole ordeal even though they were never required to admit or deny their involvement in illegal insider trading.

“In this court’s view, it is both counterintuitive and incongruous for defendants in this SEC enforcement action to agree to settle a case for $600 million that would cost a fraction of that amount, say $1 million, to litigate, while simultaneously declining to admit the allegations asserted against it by the SEC,” Judge Marrero wrote. The judge also added that CR Intrinsic “essentially folded” as long as the SEC would not make them admit their guilt.

SAC Capital clearly admitted their guilt by agreeing to the over $600 million settlement in March. It is the largest illegal insider trading settlement to date.

The Securities and Exchange Commission (SEC) has reported that they are currently reviewing Judge Marrero’s verdict.

The SEC initially charged a subsidiary of SAC Capital and its former manager, Mathew Martoma, of an insider trading scheme involving an Alzheimer’s medicine being jointly developed by two different pharmaceutical companies. According to the SEC, Martoma illegally obtained confidential details about the clinical trial surrounding the drug. Martoma discovered that the clinical trial results turned up negative through Dr. Sidney Gilman, the chairman of the safety monitoring committee overseeing the clinical trial. Gilman has already agreed to pay over $234,000 in disgorgement and pre-judgment.

Since investigating the firm, the government has found at least eight current or former SAC employees linked to allegations of illegal insider trading while working for the hedge fund.

For more information on Guru Steven Cohen and his portfolio look at Steven Cohen’s latest trades.

  • CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
  • Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
  • Double Buys:: Companies that both Gurus and Insiders are buying
  • Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.

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