After investigating charges of insider trading for more than ten years, the federal government indicted SAC Capital, a major hedge fund, accusing it of securities fraud
and wire fraud. SAC was charged with
permitting a “systematic” insider trading scheme to unfold between 1999
and 2010. Interestingly, the case seeks to attribute criminal acts of
several employees to the company itself, claiming that the fund “enabled
and promoted” the illicit behavior.
The government accused the company of “an institutional indifference” to wrongdoing that
“resulted in insider trading that was substantial, pervasive and on a
scale without known precedent in the hedge fund industry.” SAC supposedly hired traders with “proven
access” to corporate insiders likely to hold inside secrets. Five onetime SAC employees have now admitted to insider trading while at the fund.
Further, Stephen Cohen, the owner of SAC Capital, has been accused in a civil action by the SEC of failing to supervise employees suspected of insider trading.
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