Insider Trading Could Derail SAC Capital


BOSTON/NEW YORK [Reuters: 27 November 2012 ] -- The fallout from the latest insider trading case against a former SAC Capital employee could derail Steven Cohen's $14 billion hedge fund and impact the billionaire trader himself even though he has not been charged with any wrongdoing.

U.S. securities regulators, having charged former SAC Capital employee Mathew Martoma with insider trading, are now seeking to recoup $276 million as a result of illicit trades from the SAC subsidiary where he worked.

But a person familiar with SAC Capital said wealthy investors in Mr. Cohen's fund won't be responsible for paying back that money if the SEC is successful. Rather, it will be Mr. Cohen himself, or his management company, which will have to cover any court-ordered disgorgement of illicit profits for employee trade non-compliance. In reality, Cohen's personal wealth capital, which is believed to account for at least half of the $14 billion managed by SAC Capital, is at risk.

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