A U.S. court has accepted SAC Capital Management’s guilty plea on insider trading charges, which was reached last year.
The hedge fund firm settled with U.S. prosecutors back in November, agreeing to plead guilty to the securities fraud and wire fraud charges levelled against the firm in connection with allegations of insider trading. The SAC companies pled guilty before U.S. district judge Laura Swain, who reserved on the decision of whether to accept the pleas. Today, she did so.
“After due consideration, the court has accepted the guilty plea and imposed sentence on SAC, including the payment of $1.184 billion in financial penalties,” noted Manhattan U.S. attorney, Preet Bharara.d
SAC Capital agrees to plead guilty to insider trading
U.S. authorities alleged that from 1999 through at least 2010, numerous employees of SAC companies obtained and traded on material, non-public information, or recommended trades based on this information to SAC portfolio managers. The companies were charged over the insider trading offenses committed by numerous employees, involving the securities of more than 20 publicly-traded companies, saying that the “systematic insider trading engaged in by SAC PMs and research analysts was the predictable and foreseeable result of multiple institutional failures.”
The plea agreement imposes a $1.184 billion financial penalty on the SAC companies, on top of the $616 million they already agreed to pay to the U.S. Securities & Exchange Commission (SEC). The financial penalty, which is the largest insider trading penalty in history, is split between a fine in the criminal case, and a forfeiture judgment in a civil money laundering and forfeiture action that was filed simultaneously. It also requires the SAC companies and their affiliates to stop accepting outside investor funds and shut down operations as an investment adviser. The companies will also each be sentenced to five years probation.
“Today marks the day of reckoning for a fund that was riddled with criminal conduct,” said Bhara. “SAC fostered pervasive insider trading and failed, as a company, to question or prevent it.”
He noted that eight SAC employees have been convicted of insider trading, adding, “when so much criminal conduct takes place within one institution, it is appropriate to impose criminal liability on the institution itself. Today’s sentence affirms that when institutions flout the law in such a colossal way, they will pay a heavy price.”