Hedge Fund Executive Faces Insider Trading Charges

On Behalf of | Mar 29, 2013 | Insider Trading, White Collar Crime

SAC Capital is a hedge fund giant based in Connecticut. The company has been the source of a growing investigation into securities fraud based on insider trading. A 40-year-old portfolio manager was arrested this week and has been charged with conspiracy and securities fraud. The Federal Bureau of Investigation has alleged that the man participated in an “elite criminal club” wherein a network of analysts funneled insider information and private financial data to SAC professionals.

The federal investigation has led to allegations against at least nine people who work or worked for SAC Capital. Four of those people have pleaded guilty in federal court, including an analyst who once worked for the portfolio manager arrested this week. It is likely that information obtained from this analyst was vital in the investigation leading to insider trading charges. The portfolio manager has been on leave from SAC since September and was arrested shortly after returning from vacation in Florida.

SAC attempted to resolve two cases of insider trading last year by agreeing to pay $616 million to U.S. authorities. The judge assigned to the case rejected the bulk of that agreement this week due to SAC’s refusal to admit wrongdoing in connection with $602 million of the total settlement. The status of the civil case against SAC is still unresolved.

The founder of the hedge fund made headlines this week by going on what was termed as a “massive spending spree” when he purchased a Picasso painting for $155 million. His art collection is valued at more than $1 billion dollars. He also purchased a large home on the ocean in the Hamptons. The founder does not currently face any charges connected to the insider trading allegations against several of the hedge fund employees.

Source: The Guardian, “SAC hedge fund executive Michael Steinberg charged over insider trading,” by Dominic Rushe, 29 March 2013

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