SAC Capital billionaire Steven Cohen offers sacrificial lamb

A former manager at SAC Capital, a major US hedge fund founded by billionaire Steven Cohen, has been found guilty of insider trading. http://www.bbc.co.uk/news/business-26078374
Mathew Martoma was found guilty of conspiracy and securities fraud for his part in a scheme that made SAC $275m (£169m) in profits and avoided losses.
Prosecutors in New York called it the most lucrative insider trading scheme in history.
SAC paid out a total of $1.8bn last year to settle related charges.
Mr Cohen founded SAC in 1992.
Mr Cohen faces civil action from US regulators who say he failed to supervise Martoma and a fellow trader properly, allowing them to conduct insider deals. He disputes the allegations.
Prosecutors outlined how Martoma and SAC cultivated relationships with doctors involved in the trials of a new Alzheimer’s drug.
Two doctors confessed to telling him the results of the trials in advance, allowing SAC to “short” the stocks of the two research companies involved.
This delivered massive profits when the share price fell on the publication of the trial data, and earned Martoma himself a $9m bonus.
The conviction is being seen as yet another success for New York federal prosecutors, who have secured a total of 79 guilty pleas or verdicts relating to insider trading since 2009.
Martoma’s conviction is the eighth involving current or former employees of SAC, which was once an unrivalled hedge fund presence on Wall Street.
His lawyers said he planned to appeal against the conviction, which could see him face up to 45 years in prison.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: