By Emily Flitter
NEW YORK (Reuters) - Steven A. Cohen's embattled hedge fund SAC Capital Advisors will plead guilty in federal court and pay $1.8 billion to settle charges stemming from an insider trading investigation that lasted more than five years, prosecutors said on Monday.
The two sides reached a settlement agreement which, if approved by a judge, would also resolve a civil forfeiture action against SAC and its affiliates, prosecutors said.
Sources have told Reuters the total settlement amount will include a $616 million penalty that SAC had already agreed to pay earlier this year to settle civil lawsuits by the U.S. Securities and Exchange Commission for insider trading will count towards the latest deal.
U.S. prosecutors in July charged the hedge fund - which managed as much as $14 billion this year before investors began withdrawing money - with presiding over a culture in which employees flouted the law and were encouraged to tap personal networks for inside information about publicly traded companies.
Though it won't necessarily end the effort, the deal will punctuate one of the longest-running, highest-profile insider trading investigations in recent years.
U.S. Attorney Preet Bharara will appear alongside April Brooks, who is in charge of the Federal Bureau of Investigation's criminal division in New York, at a press conference at 1 p.m. EST (1800 GMT) to discuss the deal.
Jonathan Gasthalter, a spokesman for SAC Capital, did not immediately respond to a request for comment.
SAC's founder Cohen is still facing an administrative action brought in July by the SEC accusing him of failing to properly supervise his employees. The case was stayed in August after the firm was indicted. It was not clear whether Monday's deal with prosecutors would resolve that case.
Cohen himself has not been charged with any criminal wrongdoing. The indictment against SAC includes charges of wire fraud and securities fraud, and named seven one-time employees of the firm who have either been charged or convicted of insider trading.
Since early this year, when the probe began to heat up, Cohen has been slowly returning money to outside investors and was widely expected to convert his operation to a family office, merely managing his own billions, by early next year.
(Reporting by Emily Flitter; Editing by Gerald E. McCormick and Jeffrey Benkoe)
- Private Equity & Hedge Funds
- Crime & Justice
- insider trading
- SAC Capital Advisors