The Securities and Exchange Commission announced it has charged hedge fund advisor Steven Cohen with failure to supervise two senior employees and failing to prevent the duo from insider trading.

Allegations state that Cohen received “highly suspicious” information that should have been grounds for a hedge fund manager to launch an investigation regarding the basis for trades made by Mathew Martoma and Michael Steinberg—portfolio managers who reported to him.

“Hedge fund managers are responsible for exercising appropriate supervision over their employees to ensure that their firms comply with the securities laws,” said Andrew J. Ceresney, Co-Director of the SEC’s Division of Enforcement in a press release.

Numerous red flags were ignored and the two were given free rein to continue to execute trades.

“After learning about red flags indicating potential insider trading by his employees, Steven Cohen allegedly failed to follow up to prevent violations of the law. In addition to the more than $615 million his firm has already agreed to pay for the alleged insider trading, the Enforcement Division is seeking to bar Cohen from overseeing investor funds,” Ceresney stated.

 

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