Feds Indict SAC Calling Company 'Magnet of Market Cheaters'

Federal prosecutors brought criminal charges against SAC Capital on Thursday. Dubbing SAC “a veritable magnet of market cheaters,” authorities argued that the company allowed a “systematic” insider trading scheme to play out between 1999 to 2010. It is deemed that the scheme generated profits for the firm in the hundreds of millions of dollars.

Contained in the indictment is a detailed account of the inner workings of SAC, which include e-mails that show founder Steven A. Cohen and other top execs failed to prevent possible insider trading.

“Substantial, pervasive and on a scale without known precedent in the history of hedge funds,” was how Preet Bharara, the United States attorney for the Southern District of New York described the scheme in a statement.

While charges were not brought against Cohen, the 41-page indictment delivered a scathing assault on him nonetheless, stating that he “fostered a culture that focused on not discussing inside information too openly, rather than not seeking or trading on such information in the first place.”

Charges were brought by the F.B.I and the United States Attorney’s Office in Manhattan. These agencies have also spearheaded some of the most well-known securities fraud cases including those against Ivan Boesky and Michael Milken.

Federal prosecutors, however, described the insider trading at SAC as having no equal pointing to abuses that took place over a decade.

Last week, the Securities and Exchange Commission announced it had charged Cohen with failure to supervise two senior employees and failing to prevent the duo from insider trading.

 

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